A Brief look at Vodafone’s Business Strategy

Introduction:

Vodafone is a leading international telecommunication brand with operations in 25 countries and global roaming coverage. The company has acquired sharp growth its number of mobile customers in Asia pacific region during the recent years. Vodafone’s growth is a result of consistent focus upon product/services quality, customer service as well as innovation. The headquarters of Vodafone are in UK. However, a  large number of its customers are found in the other markets. The largest number of its mobile customers of all countries are in India. The company has brought a large range of products and services for both individual and enterprise customers. To grow its coverage in markets where it does not have its operations, the company has partnered with local operators in 47 countries. The telecommunication industry has grown hypercompetitive and the technology needs of customers have kept growing. As such Vodafone is investing huge resources in Research and Innovation every year to grow its range of services and operational efficiency. India has strategically grown in importance as a core market for Vodafone. In Europe too, the company has the largest NGN footprint and is the fastest growing broadband provider.  Vodafone’s momentum in convergence has also accelerated. It is strategically growing its core advantage in Europe while also expanding its footprint across Asia pacific.

Emerging Opportunities and challenges

In the recent years, the company has focused on making its core advantage stronger. The company aims to become a converged communications leader in all of its European markets, a mobile data leader in Africa and India, and an Enterprise leader internationally.  Industry environment in the telecommunication industry has changed rapidly during the recent years. Innovation and scale, both have become key to success in a hyper-competitive market environment. People’s lifestyles and work are being defined by new features. They are changing due to rising global smartphone penetration, ubiquitous superfast internet access, increasingly converged solutions and remarkable new technologies. However, with the rise of these technologies a new set of commercial, societal and regulatory challenges have also emerged. There are both opportunities and challenges before the Vodafone group.

Changing Industry environment and consumer expectations

During the past three decades the telecom industry has experienced significant changes. From 2G to 4G,  there has come a sea difference in how people accesses online services. Next is 5G which will enable speeds in excess of 1Gbps and with much lower latency. 5G could also lead to the development of new IoT services. Apart from growing regulatory intervention, markets have also grown highly competitive. The telecom industry is seeing higher competition and now the customers are having several more alternatives.

In each of these markets where Vodafone operates, there are three to four mobile network operators like Vodafone which own their network infrastructure. There are resellers as well which wholesale network services from the mobile network operators (MNOs). The breadth and depth of information that  the consumers today have access to was unimaginable some ten years ago. This has revolutionized how people learn, share and access a number of services including education, financial services as well as healthcare. With this level of progress, consumer and societal expectations have also changed a lot. This has led to growth in opportunities for Vodafone. However, there are also a number of challenges including consumer privacy that need to be addressed ethically.

Focusing on digitization and customer engagement

Customer experience is now an integral part of Vodafone’s business and marketing strategy. Apart from being an important point of differentiation, it is also important for reducing churn rate and increasing loyalty. Vodafone has started special campaigns that address this part of its marketing strategy. The focus of its CXX campaign is to provide its customers with an outstanding and differentiated customer experience. Meanwhile the role of digital technology in customer service and management has grown. Vodafone has also grown its investment in digitization of its operations for better customer management, to create higher customer convenience and grow its reach and penetration in key markets.

In the near future, the company will increase it use of data analytics to manage the delivery of personalized services for individual customers. Over time, its app and website will become the main channels of marketing and customer acquisition. Automated digital support based upon artificial intelligence technologies will also make it possible to deliver better service and follow customer requests with higher efficiency. This level of customer engagement is important for managing customer relationships better and to grow the level of penetration in major markets. Moreover, digitisation of processes will help bring higher operational efficiency and reduce operational costs.

Offering the best data experience and leading in converged communications

Increased smartphone use and movement towards 4G has led to higher demand for mobile data. Data usage on Vodafone’s network have more than trebled during the past three years and consumers have kept moving towards larger data bundles. Customers want higher speed but do not want to be charged unexpectedly for higher usage. During the past five years, Vodafone has made substantial investments in its network which enables it to capture this demand. Vodafone has brought a large range of exciting and personalized offers to capture the growing demand and drive customer engagement high in multiple markets.

In 2018, Vodafone’s business also gained significant momentum in converged communications. One major step in this direction was the announcement of Vodafone’s intention to acquire Liberty Global’s cable assets in Germany, the Czech Republic, Hungary and Romania for €18.4 billion, which will transform Vodafone into Europe’s leading next generation infrastructure owner and a truly converged challenger to the dominant player. The converged offers of Vodafone include a combination of mobile, fixed and content services. The company offers a comprehensive set of converged solutions for both the individual and enterprise customers. By the end 2018, the base of converged customers of Vodafone had grown to 4.5 millions and it had added around 0.8 million new ones during the year. Vodafone’s churn rate for converged customers has also improved.

Growing Strategic Importance of the Indian market

India is currently the largest market of Vodafone based upon the number of mobile customers. There are more than 223 million mobile customers of Vodafone in India. The strategic importance of India as a core market for Vodafone has grown. The company is looking forward to being a mobile data leader in India. It is planning to merge Vodafone india with Idea cellular to expand its reach in the indian market. However, there was a 19% decline in the organic service revenue of Vodafone India which was a result of growing regulatory pressure and competitive intensity in the Indian market. Service revenue was down to €4,643 millions in 2018 from €5,834 million in 2017. The mobile revenue market share of Vodafone in India was 20.9% in 2018. Vodafone has experienced significant growth in the number of 4G mobile data customers in India. India remains a strategically important market for Vodafone where its merger with Idea cellular is expected to yield positive results.

Sources: Vodafone Annual Report 2018