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STRATEGIC MANAGEMENT PROJECT
On
VODAFONE
SUBMITTED BY
PRAGYA RATAN
Prgyaratan1@gmail.com
STRATEGIC MANAGEMENT PROJECT
On
VODAFONE
SUBMITTED BY
PRAGYA RATAN
Prgyaratan1@gmail.com
STRATEGIC MANAGEMENT PROJECT
On
VODAFONE
SUBMITTED BY
PRAGYA RATAN
Prgyaratan1@gmail.com
TABLE OF CONTENTS
PART-1
Introduction to the Company & Industry
Research Design & Methodology
Company’s Vision & Mission
PART-2
External analysis
Industry/Competitor analysis
SWOT/TOWS
PART-3
Company analysis on the basis of key performance indicators
Strategic options/alternatives
Strategic & Financial Objectives
Recommended Organizational & Business Strategies
PART-4
Financial projections & overall evaluation of strategies
Monitoring & control
PART-5
Vodafone customer base
PART-1
1.1 Introduction Of Indian Telecom Industry
The Indian telecom sector has seen an exponential expansion in the past few years with tele
density increasing from 10% in year 2004 to 74% in year 2012. India at present has close to 900
million mobile users with 8 million subscriber additions per month. It has been observed that tele
density is lower in rural areas than in urban areas. Areas with low tele density might offer
potential for future growth. There are approx 650,000 telecom towers, 60% of which are in rural
areas. The telecom on rural India is a playing a significant role for visible participation of rural
India in main stream socio-economic growth. The majority of India’s population is in rural areas
almost two-third, however with tele-density of 13%. With saturation of urban markets, rural
India poses a huge opportunity to telecom operators. Setting up a telecom infrastructure in rural
areas has its own challenges. The big challenges for rural telecom network are to maintain
network uptime due to regular power cuts, power problems and equipment maintenance.
Instantaneous solution is running the base station sites with Diesel Generator backup power adds
high cost to the operations. Another long term solutions of these might be using of alternative
power like solar power, wind power. At the same time, telecom companies needs latest
equipments that consume less power.
The growth in mobile networks over the next few years will come from remote parts of the India,
where access to electric grids isn't always guaranteed. The service providers are under
tremendous pressure to deliver the solutions in efficient manner and make availability of
networks. To overcome the electric power grid supply problems, the widely deployed solution is
base stations equipped with diesel-powered generators.
1.2 Introduction to the Company
Vodafone India Limited, formerly Vodafone Essar Limited, is the second largest mobile
network operator in India after Airtel by subscriber base. It is based in Mumbai, Maharashtra. It
has approximately 160 million customers as of December 2013. It offers both prepaid and
postpaid GSM cellular phone coverage throughout India with good presence in the metros.
Vodafone India provides 2.75G services based on 900 MHz and 1800 MHz digital GSM
technology. Vodafone India launched 3Gservices in the country in the January–March quarter of
2011 and plans to spend up to $500 million within two years on its 3G networks. Vodafone
added maximum subscribers in July 2014, with 13.6 lakh new users joining its network to take
its base to 17.12 crore. Vodafone is the second largest player in telecom operator in India after
Airtel, with a market share of 22.95%.
Vodafone India
Type Private
Industry Telecommunications
Predecessors Hutchison Essar Limited
Headquarters
Peninsula Corporate Park, Ganpatrao Kadam
Marg,Lower Parel, Mumbai,Maharashtra, India
Services
Mobile telephony
Wireless broadband
Parent
Vodafone Group
Website
www.vodafone.in
History of Vodafone
Max Touch, Orange and Hutch (1992-2007)
Hutchison Max Telecom Ltd. (HMTL), a joint venture between Hutchison Whampoa and
the Max Group, was established on 21 February 1992.The licence to operate in Mumbai (then
Bombay) circle was awarded to Hutchison Max by the Department of
Telecommunications(DoT) in November 1994. The cellular service branded "Max Touch" was
launched the same year. Switching and other related equipment were provided by Ericsson and
the network was designed, engineered and set up by Motorola. Hutchison Max entered into the
Delhi telecom circle in December 1999, the Kolkata circle in July 2000 and the Gujarat circle in
September 2000. Licences for these circles had initially been awarded by the DoT in 1994, 1997
and 1995 respectively. Between 1992 and 2006, Hutchison acquired interests in all 23 mobile
telecom circles of India.
Vodafone purchases Essar's stake
In July 2011, Vodafone Group agreed terms for the buy-out of its partner Essar from its Indian
mobile phone business. The UK firm paid $5.46 billion to its Indian counterpart to take Essar out
of its 33% stake in the Indian subsidiary. It will leave Vodafone owning 74% of the Indian
business, while the other 26% will be owned by Indian investors, in compliance with Indian
law.On 11 February 2007, Vodafone agreed to acquire the controlling interest of 67% held by Li
Ka Shing Holdings in Hutch-Essar for US$11.1 billion, pipping Reliance Communications,
Hinduja Group, and Essar Group, which is the owner of the remaining 33%. The whole company
was valued at USD 18.8 billion. The transaction closed on 8 May 2007. In April 2014, India
based Piramal Group sold its 11% Stake in Vodafone India to Prime Metals, an indirect
subsidiary of Vodafone Group.
Vodafone India subscriber base statistics as on January, 2013.
1.2 Research Design & Methodology
Research is one systematic activity that is undertaken by scholars, to help in widening our
knowledge base in all fields of education. Research is undertaken in both social sciences as well
as science subjects such as physics and biology. There are many different types of researches
such as descriptive, exploratory, explanatory, and evaluation research.
Exploratory research is challenging as it tackles vaguely defined hypothesis and tries to find
answers to questions. This kind of research is social in nature and requires some preliminary
work in the direction of the research. Exploratory research is treated as the purpose of the
research saying this kind of research proves to be useful when the hypothesis has yet not been
formed or developed. There are certain basic premises that need to be tested at the start of an
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
18000000
Gujrat
UP
Maharashtra
WestBengal
Tamilnadu
Rajasthan
AndhraPradesh
Delhi
Goa
Karnataka
Bihar
Kolkata
Punjab
Haryana
MP
chennai
odisha
Assam
jammu&kashmir
Himachalpradesh
Mumbai
No.Of Subscribers
No.Of Subscribers
exploratory research. With the help of these hypotheses, the researcher hopes to arrive at more
generalizations.
Type of Data collection:
1) Secondary data collection through online sites, research papers, white papers, articles,
journals, previous research on similar topics etc.
1.3 Company’s Vision & Mission
Vision
Vodafone can help to transform societies by bringing innovative products and services to our 404
million customers, 68% of whom live in emerging markets.
Mobile technology is already a vital tool in people’s lives and our ambition is for Vodafone’s
mobile services to further improve people’s livelihoods and quality of life.
At the same time, we aim to help consumers, governments and businesses tackle some of the
significant challenges they face – from food shortages and ageing populations, to lack of access
to communications, healthcare and financial services.
Our business focus on emerging markets, enterprise, data and new services gives us the ability to
achieve our ambition to contribute to global development in this way, while continuing to grow
our business at the same time, by developing commercially viable, scalable services that support
sustainable development.
Mission Statement
We will enhance value for our stakeholders and contribute to society by providing customers
with innovative, affordable and customer friendly communication services.
Through excellence in our services we aspire to be the most respected and successful
telecommunications company in India.
We see our customers, employees, shareholders and the community we operate in as our most
important stakeholders.
 Customers
We enhance value through delivering affordable, reliable and customized communication
services which are simple to use, enjoyable, seamless and secure. Our customers respect us
because:-
• We understand their needs
• We create innovative services
• We consistently deliver on what we promise
• We are transparent and trustworthy in our interactions
• We provide a secure and reliable network
• We offer affordable products and services
We define success as delighted customers who recommend us to others.
 Employees
We enhance value through providing enriching careers and long term growth opportunities in a
fair and collaborative work environment. Our employees respect us because
• We provide a healthy and safe work place
• We encourage mutual respect, trust and appreciation
• We promote diversity and treat them inclusively
• We conduct ourselves with transparency and integrity
• We pursue speed and simplicity in all that we do
• We recognise and admire accomplishments
We define success as happy employees with great careers.
 Shareholders
We enhance value through growing the company’s revenue and profitability while creating
sustainable free cash flow through efficient resource utilisation and effective risk management.
Our shareholders respect us because
• We follow ethical business practices
• We communicate in a fair and transparent way
• We enhance company’s reputation and brand value
• We do everything to protect our shareholders interest
We define success as creating sustainable value by delivering great shareholder return.
 Our Community(Business partners, Authorities, Influencers and Local Communities)
We contribute to the society by supporting authorities in mobilizing social change and achieving
their economic goals, creating value for our business partners and contributing to the social &
economic development of local Communities. Our community respects us because
• We act responsible towards our environment
• We create community connect
• We stimulate business and economic growth
• We have high standards of corporate governance
• We conduct our business with transparency integrity and fairness
We define success as being the most respected telecom company in India
PART-2
2.1The external environmental analysis
The external environments significantly have an impact on the company‟s strategic management
model. According to Pearce and Robinson (2009), the external environment “can be divided into
three interrelated subcategories: factors in the remote environment, factors in the industry
environment, and factors in the operating environment”. These factors Vodafone Group is facing
are discussed in this part.
Remote environment
 Economic Factors
Most companies have recently been confronted with slower growth than ever in the volatile and
rapidly changing global markets. Vodafone Group is not the exception and it hasn‟t been
sustainably growing in some markets. International Monetary Fund (2010) reported that
European market growth is projected only at 1.0% and 1.3% in 2010 and 2011 respectively but
Vodafone Group has heavily relied on slower growth and saturated European market due to
extremely higher mobile subscriber penetration with more than 150% in some countries. Its
revenues from the market captured 67.3% of its total revenues in 2009 but ARPU (average
revenue per user) in UK, Greece, Netherlands, Spain, Italy, Germany, and Portugal where the
company is operating has been slightly decreasing. In contrast, IMF (2010) reported that Indian
market growth is projected at 9.4% and 8.4% in 2010 and 2011 respectively. Vodafone Group
has improved performance in emerging markets in 2009 and executing in emerging markets is
one of the four main objectives. Service revenues in the market grew by 14.7% in 2009, and
Indian mobile market, the second-largest market around the world after China, has been
perceived as its key market.
 Political factors
Political factors are also a major consideration for Vodafone Group on formulating and
implementing its strategies in accordance with each country specific legal, regulatory and tax
environments. The company also has to comply with an extensive range of requirements that
regulate and supervise the licensing and the allocation of frequency spectrum. Vodafone (2010a)
stated “decision by regulators regarding the granting, amendment or renewal of licenses, to us or
to third parties, could adversely affect our future operations” (p. 38). For instance, EU recently
introduced a multi-year spectrum policy program. India made regulations for the implementation
of mobile number portability in 2009.
 Technological Factors
Telecommunication operator‟s ability to adapt the advanced technologies has a great impact on
innovative and differentiated products and services in response to the rapidly changing customer
needs and market environments. Saxtoft (2008) argued that “competitive advantages in the future
convergent communications industry will be based on the organizational ability of
communications service providers to utilize the specific mix of network data, services data and
customer data available to each of the players in the market” (p.71). With its ability to
continuously adapt new ICT, the company has created value-added services like Vodafone 360
and Cloud Computing services.
Industry environment
Most telecommunications operators in developed markets have been confronted with a fierce
competition and declining revenues, and understating of competitive forces is greatly crucial to
thrive and survive. Michael Porter‟s five competitive forces are discussed in this section.
Vodafone Group hasn‟t experienced in the extremely steep declines in revenues while operating
in both developed and emerging markets and thus diversifying risks.
 Threat of Entry
Telecommunications industry is very capital-intensive business with a huge amount of capital to
acquire and maintain its network infrastructure and technologies, and create new products and
services. Although the huge capital requirements traditionally represents a more significant entry
barrier to new entrants than some other industries, recent MVNO (mobile virtual network
operators) business model lowers the barrier and small companies with differentiated products
and services has been identified as new entrants. In addition, while telecommunications operators
have made significant efforts to redefine their value chains to create new value-added services,
Google, Amazon and other online companies have attempted to redefine industry boundaries.
These companies are perceived as new competitors in telecommunications industry.
 Supplier Power
Vodafone Group‟s key suppliers are handset manufacturers like Samsung, Nokia and Motorola,
and network equipment manufacturers like Ericsson, Alcatel-Lucent, and Nokia Siemens
Networks. Those suppliers‟ bargaining powers have weakened due to lack of technical
advantages and new Chinese entrants that extremely pursue cost leadership. In contrast,
Vodafone Group has enhanced its bargaining power to key suppliers while focusing on „One
Vodafone‟ program to integrate business activities to leverage economies of scale and scope.
 Buyer Power
While Vodafone Group has been confronted with a fierce competition globally, its customers
tend to be more price-sensitive in both developed and emerging markets. The company has still
relied on European markets with significantly higher mobile subscriber penetration, and ARPU
in all Vodafone operating countries in the markets have been decreasing. In Indian mobile
market as its key market, ARPU continued to decline despite subscription growth.
 Threat of Substitutes
Vodafone Group has continuously diversified its product and service portfolio including
traditional mobile voice and messaging, data, fixed line solution and other services such as
value-added services to meet its customers‟ total communications needs. Its mobile voice and
messaging services, data, fixed line solutions, and other services accounted for 67%, 11%, 10%,
8% and 4% of total revenues respectively in 2009, and therefore substitutes for its mobile voice
and messaging services have a significant impact on its business. Although mobile voice services
have overtaken traditional fixed voice services, especially in emerging markets, VoIP (Voice
over IP) services are identified as its substitutes in addition to fixed voice services globally.
Myers expected (2010) that VoIP product revenue will climb to $578 million in 2Q2011, a 2.4%
increase over 2Q2010. While there are still concerns on the reliability and quality over IP
networks, more broadband customers become aware of the benefits of VoIP to “enjoy the
flexibility and cost-savings by using their existing broadband connection for voice services
(Myers, 2010, p. 37). Vodafone Group hasn‟t still ultimately embraced VoIP services but growth
of VoIP services has a significant impact on a decrease in its voice ARPU. Vodafone Group has
focused not on cost leadership to directly compete with VoIP services but on diversifying its
product and service portfolio and launching new value-added services. Its data services are
mainly used to connect the Internet and its substitutes are broadband services and fixed Internet
services. Vodafone has embarked on fixed broadband service especially in developed markets to
offer fixed-mobile converged services to differentiate its services from other fixed or mobile
operators. In developing markets, fixed broadband services and Internet services are not
identified as substitutes for mobile Internet services any more since mobile Internet services have
overtaken fixed broadband services. Its fixed broadband services are identified as
complementary services to deliver fixed-mobile converged services. The company has generally
started with mobile services and then added fixed services in all market the company has entered
into. According to Marvrakis and Saddi (2009), “the previously pure mobile operator is now
following a total communications strategy which includes mobile (cellular), broadband (fixed)
and wireless; it has been offering combined services, with fixed, mobile and broadband services
under a single bill”.
 Rivalry
Vodafone Group is operating its business in more than 70 countries and the general competitive
landscape differs in developed and emerging markets. However, the switching cost is low in both
markets and the differentiation strategy is essential for the company to keep its customers from
rivals. European market, the largest markets for Vodafone Group, has been saturated due to
extremely higher mobile subscriber penetration. Value-added services are identified as key
differentiators and the company has launched Vodafone 360, and Cloud computing services in
the market. In contrast, Indian is one of the highest growth mobile markets globally and the
company accounted for approximately 30% of its total number of subscribers globally. While the
mobile subscriber penetration in Indian markets hasn‟t reached 50%, Vodafone Group and other
mobile communications companies are facing extremely fierce price competition due to lack of
differentiated services.
Operating environment
 Competitive Position
The company‟s geographic footprint in more than 70 countries affords its huge economies of
scale and scope and ensures that Vodafone Group has diversified revenue base to cope with
recent economical recession “as its emerging market operations helped cushion the poor
performance in Europe and Turkey”. The Vodafone brand is perceived as one of the most
recognizable global telecommunications brands and the company has capitalized on the brand
recognition to enter into new markets. The company is also a market leader in developing
products and services. It hasn‟t implemented cost leadership but differentiation strategy while
leveraging its strong brand recognition and diversified geographic footprint. However, the
company has faced fiercer competition across most of global markets than ever. Its major multi-
national competitors are France Telecom‟s Orange, Deutsche Telekom‟s T-Mobile, and
Telefonica‟s O2. The company also has to compete with domestic mobile operators like TMN in
Portugal and KPN in Netherlands in European market. Its performance in European market is
worse than its rivals especially in Germany, Italy and Spain. The company is also facing fierce
price competition in Indian market. It presently comes third behind Bharti Airtel and Reliance.
 Customer Profiles
While diversifying its markets and product and service portfolio, it has expended its customer
base globally and served its products and services to both consumers and enterprises. Traditional
voice and messing services have been already commoditized globally and they are affordable
enough for most people living in the countries where Vodafone Groups is operating.
 Human Resources
Vodafone Group employs around 85,000 people and its employees are identified as a source of
competitive advantages to improve existing customer relationships locally. Vodafone Group
(2010a) stated that “we rely on our people to maintain and build on our success and to deliver
excellent service to our customers”, and “we aim to attract, develop and retain the best people
and to realize their full potential” (p .22). The Vodafone Way program can help all employees
align with a common set of values and behaviors in order to be an admired, innovation and
customer-focused company operating with speed, simplicity and trust. Employee turnover rate
has been stable at 13%, 13%, and 15.2% in 2010, 2009 and 2008 respectively.
2.2 Industry/Competitor analysis
 Positioning Strategy:-
Vodafone
 Vodafone has veered towards warmth and emotions.
 Vodafone used the powerful visual imagery of a dog.
Airtel
 Airtel is focused on functionally and efficiency.
 Airtel choose to use music, which is not nearly as effective.
 Target Audience:-
Vodafone
 They are targeting middle class person as their target audience.
 It can be justified by their product like chota recharge.
Airtel
 A group or class of persons enjoying superior intellectual or social or economic status
 Up market professionals
2.3 Segment Target Positioning (STP) & SWOT Analysis
STP Analysis
Segment Upper class and above; Lifestyle
Target Group Corporates; student campus plans
Positioning Inviting, cheerful and humorous
SWOT Analysis
Strength 1.One of the most popular cellular service provider in India
2.One of the largest Telecom operator in the world
3.Only Indian operator, with VSNL, that has an international submarine
cable
4.High brand visibility
5.Strong advertising with ZooZoo concept
6.Tieup with international sports like FormulaOne
Weakness 1.Price competition from BSNL and MTNL
2.Untapped Rural Market
Opportunity 1.Fast expanding cellular market
2.Latest and low cost technology
3.Untapped rural market
Threats 1.New entrant's low price offering
2. Saturation point in Basic telephony service
3.Mobile Number Portability
Competition
Competitors 1.Airtel
2.Idea
3.Reliance
4.Tata Docomo
5.Aircel
6.MTNL
7.BSNL
8.Uninor
9.Tata Indicom
10.Virgin
PART-3
3.1 Company analysis on the basis of key performance indicators
Key Performance Indicators (KPIs) are a set of metrics that regularly assess the health of each
business activity against the strategic and operational objectives. KPIs represent “a set of
measures focusing on those aspects of organizational performance that are the most critical for
the current and future success of the organization”.
The actual KPI values are compared to the target KPI values in the balanced scorecard on a
regular basis while KPIs have changed in response to the business environment changes. The
better the actual KPIs are compared to the target KPIs, the higher the scores in most cases. KPIs
provide an objective feedback and facilitate the objective setting for future performance. KPIs
can be divided into the strategic, tactical, and operational levels. Strategic KPIs can be directly
translated into tactical KPIs and subsequently into operational KPIs, and they are logically tied
with each other through a set of cascading dashboards. “Dashboards can be configured and
personalized to provide strategic, operational and tactical views of the organization, processes,
services, and activities” in line with each decision making level.
According to Rasmussen, Bansal and Chen (2009), there are ten steps to use plan a KPI design
project:
 Build the team.
 Clarify and agree to the organization‟s strategies and tactics.
 Decide on dashboard categories and prioritize.
 Choose organizational deployment.
 Create a list of KPIs and metrics for each strategic objective.
 Test KPIs against framework.
 Select top KPIs.
 Choose presentation method and interactivity for each KPI.
 Document decisions and get sign-off.
 Design architecture and dashboards based on document.
Balanced Scorecard methodology in Vodafone Group
Vodafone Group has already implemented the balanced scorecard methodology that is not only
focuses on the financial perspective but also customer, business process, and learning and growth
perspectives. The approach has helped Vodafone Group create additional values. According to
EFM Software (2009), there are several reasons why Vodafone Group decided to use the
balanced scorecard and eventually developed eighty and even up to one hundred indicators:
 There was a need for operational performance measurement and feedback.
 The increasing complexity of systems and organization as a consequence of its rapid
growth led to decreasing coherence between different management reports.
 The business dynamics cause continuously changing external factors which in turn
influence the decision making.
In the interview conducted by Pointon (2005), the former CEO at Vodafone Australia, Grahame
Maher mentioned the values of the balanced scorecard: As for the BSC the beauty of that theory
is that everything in the business should be measured and not just the accepted financial
measures. The BSC has a natural flow which says the flow is PEOPLE then PROCESS then
CUSTOMER and then finally FINANCIAL measures as they are just outcomes of the other
stuffs. This is completely consistent with the Values based approach which puts people as the
most important focus.
In another the interview conducted by Supply Chain Standard (2006), the head of services at
Vodafone Global Supply Chain explained the values of the balanced scorecard as “in terms of
building the community to maximize performance, we are well down the track on structuring an
integrated SCM organization and are to implement a balanced scorecard reflecting not just
savings but the total value add to Vodafone of the SCM function”.
In addition to internal performance management objective, Vodafone Group has externally
reported some of its KPIs in its interim management statement on a regular basis. Actual and
target values of EBITDA margins, service revenue growth, free cash flow, net debt, adjusted
operating profit, and data traffic growth are included in the statement. Those four strategies are
now decomposed into strategic objectives, and performance measures are developed for each of
the strategic objectives, as shown in Figure. In the annual report for the year ended 31 March
2010, Vodafone reported the a number of KPIs used by The Board and the Executive Committee
“to monitor Group and regional performance against budgets and forecasts as well as to measure
progress against our strategic objectives” (Vodafone, 2010a, p. 24). Those KPIs are categorized
as „VF defined‟ in Figure. To completely align with each of strategic objectives, a total of five
KPIs are relatively proposed, and categorized a Proposed‟ in Figure .
KPI for Vodafone Group
 Customer Perspective
The customer delight index, churn rate, and revenues from emerging markets, and the number of
proportionate mobile subscribers are developed in line with each of strategic objectives in the
customer perspective. Mobile technologies have evolved and its customers use their mobile
phones not only to call but also access the internet, watch television, play music and take
pictures. Vodafone Groups has focused on customer value enhancement to maintain their loyalty
and trust. According to Vodafone (2010b), the Customer Delight Index measures the levels of
satisfaction and dissatisfaction: Our Customer Delight Index (CDI) measures levels of
satisfaction and dissatisfaction among consumer and business customers. It helps us to monitor
our progress against our goal to ‘delight our customers’. The CDI results are reviewed quarterly
at board level to identify priorities for improvement. In addition, a Customer Experience
Committee meets monthly to review issues affecting customer satisfaction and put action plans
in place.
 Financial Perspective
EBITDA margin, free cash flow, and return on common equity („ROE‟) are developed in
accordance with each of strategic objectives in the financial perspective. A robust network
infrastructure is a source of competitive advantages for Vodafone Group but it generally reports
large losses due to hugely spending capital expenditure to construct the infrastructure. EBITDA
margin enables to analyze the profitability of core business operations while deducting the huge
amount of interest, taxes, and capital expenditures. Free cash flow generation is a critical source
of Vodafone Group‟s growth while establishing its entities through the acquisition, joint-venture,
and strategic alliance globally. In addition, free cash flow can support higher dividends and in
turn contribute to maximizing shareholder‟s values. ROE is the most important bottom line
accounting ratio that represents the actual return earned by shareholders and is the best measure
to directly assess its actual performance against the strategic objectives „drive shareholder
return‟.
 Learning and Growth Perspective
ARPU, data revenue, fixed revenue, and the number of enterprise mobile voice connections are
developed in accordance with each of strategic objectives in the learning and growth perspective.
Most of those measures are typically categorized into the financial perspective. However, not
tactical and operations KPIs but strategic KPIs are analyzed in this research and therefore those
measures are considered as a reflection of Vodafone Group‟s innovation in this research.
Vodafone Group hasn‟t implemented the cost leadership strategy to gain a competitive
advantages but it relatively focuses on creating and launching new value-added services to
increase ARPU. ARPU can be therefore considered as one of the key measures of its innovation.
While traditional voice and messaging services has captured more than 75% of its service
revenues, data service is targeted as one of three key areas for growth, and therefore the data
revenue is a key measure to directly evaluate its growth objective.
Vodafone Group has expanded fixed broadband customer base to be a total communications
provider. It has only fixed broadband services in its fixed service portfolio, and the broadband is
also perceived as one of three key areas for growth. Fixed revenue represents the growth
objective and is considered as a key measure. The last one of three key areas for growth is the
enterprise services. While the enterprise service revenues are not independently reported in the
annual report, the main enterprise service is an enterprise voice service and therefore the number
of enterprise mobile voice connections can be considered as a key measure of its growth
objective.
 Business Processes Perspective
The employee turnover rate, annual capital expenditure, and operational efficiency ratio are
developed in accordance with each of strategic objectives in the business process perspective.
Vodafone stated that “We rely on our people to maintain and build on our success and to deliver
excellent service to our customers”, and “we aim to attract, develop and retain the best people
and to realize their full potential” (Vodafone, 2010a, p .22). The employee turnover rate is one of
the key measures to evaluate its performance against the strategic objective „maintain high
performance benchmark for employee engagement‟.
As a part of cost efficiency programs, the two-year working capital reduction program is
executed and the working capital itself is the best measure to directly evaluate the actual
performance against the targeted working capital. While the £1 billion cost reduction program
has already been delivered, Vodafone has extended this program to a further £1 billion cost
saving by 2013. £1 billion includes both the capital and operating expenditures and it might be
difficult to focus on either capital or operating expenditure. However, the objective of the cost
reduction program is to improve its operational efficiency and, the number of subscribers versus
the number of own employees‟ ratio can alternatively used.
3.2 Marketing strategy of Vodafone
 Vodafone’s strategy is customer focused and product led; the company is continually
developing new products and services which utilize the latest technological advances.
 To keep its leading edge, Vodafone is continually looking to add value to the services it
provides and to the packages it offers to customers.
 ZooZoo , the new brand ambassador of Vodafone, has created a furors in the advertising
industry.
 Vodafone has given birth to the Zoozoo: a special character created specifically to convey a
value added service (VAS) offering in each of the newly released commercials.
 Vodafone has come with creative advertising campaign for its various plans.
 This strategy has captured the imagination of millions. The strategy is a buzz that lives up
to the brand image of great creative's and clever marketing.
 In the first 10 days of IPL (Indian premier league) it has reached a cumulative of 89 million
people. This is a wonderful strategy adopted by Vodafone.This has helped the company to
raise not only its profits through sales but has also tremendously increased its brand value.
Zoozoos have become so popular that Vodafone has succeeded in its effort of viral or buzz
marketing. Their add campaign has gained so much popularity all over the world.
3.3 Business strategy of Vodafone
3.4 Strategic & Financial Objectives
The primary objective of Vodafone as a business entity is profit maximisation. The company has
a mission statement that ensures for this objective to be achieved in the best possible manner.
Vodafone’s mission statement is “to be the communications leader in an increasingly connected
world” (Annual Report, 2010). Accordingly, this mission statement is communicated to all
stakeholders of the company, especially to 84,990 employees (Company Description, 2010) of
the company, due to the fact that it is employees who are going to contribute the most to the
achievement of the mission statement.
Vodafone is committed to achieving its aims and objectives through offering innovative and
superior services. According to Saplista (2008), Vodafone is not limited to offering basic
telecommunications services such as mobile phone calls and text messaging, but also offers such
advanced services as:
 Vodafone at Home and Vodafone Office represent integrated mobile and communication
services to satisfy household, as well as business needs.
 Vodafone Passport allows customers to ‘take their home tariffs abroad’ through roaming
services which is possible due to the wide global presence of the company.
 Vodafone Live! is integrated communication and multimedia solution offered by the
company to be used through mobile phones and notebook computers.
 Vodafone 3G offers 3G services that allow customers to transfer and download data in
various formats.
 Vodafone Mobile Connect data cards and Mobile Applications offer customers the
possibility of portable internet.
3.5 Strategic Model for Vodafone
The level of competition in each industry, especially in telecommunications industry Vodafone is
operating in has become very fierce. The only way to survive and expand in such a competitive
environment for Vodafone is to have an efficient strategy that would be the source of
competitive edge for the company. Currently Vodafone has no clear strategy. Therefore potential
customers are not sure in what ways the company can offer value to them.
According to Porter’s generic strategies companies can choose cost leadership and differentiation
strategy in narrow and broad scope (Porter, 1985). Vodafone is highly recommended to
implement differentiation strategy in a industry-wide scope. Thus, Vodafone should develop
products and services with additional features that present value for potential and existing
customers, and the company can charge additional extra prices for this additional feature.
For instance, in its portable and home broadband services Vodafone can further invest in
research and development and achieve increasing the speed of the internet browsing they are
offering. This particular strategy is most likely to prove efficient due to the fact that although
currently there are many internet providers in UK the speed of internet browsing tends to
decrease during specific hours of the day.
Another justification for the suitability of differentiation strategy for Vodafone relates to the fact
that due to the current size and financial resources of the company Vodafone can commit to high
level of research and development expenses this strategy initially requires. Although Vodafone’s
competitors do understand the advantages of differentiation strategy, unlike Vodafone the state
of their financial resources do not allow them to adopt differentiation strategy. Information
system can be used at each above specified decision-making level in order to give competitive
edge to Vodafone manager at that level in particular and to the company itself in general. Curtis
and Cobham (2008) define information system as an integrated combination of information
technology components and related human efforts that is used to assist in operations and decision
making.
Information system at each decision-making level at Vodafone should be devised and maintained
in a way that it can serve the two following purposes:Firstly, information systems should support
the key business functions, and create competitive edge for Vodafone.Secondly, information
system should assist in efficient facilitation of Vodafone’s customer relationship management. In
order to achieve these objectives the following recommendations should be implemented.
 Strategic level management. Information system at strategic level for Vodafone should
include all external and internal factors that are going to affect the company. Information of
such a nature should be supplied to strategic level managers systematically in order to assist
them in decision-making. Moreover, information system intended for Vodafone strategic
level management should contain detailed information about potential overseas markets,
information regarding the extend of competitor activity as well as information regarding the
suitability of Vodafone products and services to today’s competitive standards. Inefficient
information system at strategic level management is going to have dramatic negative
consequences caused by not being able to respond to changing market conditions, because
there was no accurate information about the changing market conditions in the first place.
 Tactical level management. Information system for Vodafone managers at tactical level
should include breakdown of sales by a region, as well as breakdown of sales by a product or
a service. It is important for such type of information to be supplied to tactical level
managers on a regular basis. Moreover, information technology should be widely used in
order to collect such type of information, because it will make the process faster, as well as
cost efficient. Not implementing and maintaining efficient information system for tactical
level management will cause huge losses for Vodafone which is going to affect the whole
region and damage the image of the company dramatically.
 Operational level management. The scope and range of information system in operational
level management is considerably smaller compared to strategic and tactical levels.
Nevertheless, it is equally important for operational level management at Vodafone to have a
constant supply of information relating to the process of products and services, stock
availability, customer credit ratings etc.Again information technology must be widely used in
order to process and store information system at operational level management. The
negligence of this recommendation may result in loss of revenues caused by the absence of
stock in stores, improper pricing and many other ways.Currently Vodafone commands a
leading position in the global telecommunications market. However, due to the constantly
changing marketplace the company cannot afford to take this position for granted and has to
engage in increasing its competitive advantages in many fronts.
3.6Recommended Organizational & Business Strategies
 Building a learning organization and a professional intellect
Vodafone Group has embraced diverse workforce and offers equal opportunities for all aspects
of employment and advancement, regardless of race, nationality, sex, age, marital status,
disability, religious or political belief, to understand expectations of its diverse customers around
the globe and have required skills and competences to create and launch the innovative and
differentiated products and services that Vodafone Group meets its customers‟ requirements.
Vodafone Group created a leaner and agile structure with clear accountabilities in 2009 to
accommodate rapid growth. Three regions, including Europe, Africa and Central Europe, and
Asia Pacific and Middle East, were created and each regional CEO was appointed. Along with
the group-wide organizational restructuring efforts, several centralization initiatives have been
accelerated, including supply chain, product development, IT and network programs, and
terminal procurement. As the result, approximately 1,900 jobs were eliminated but the overall
number of employees grew 9% because of rapid growth in emerging markets and business
acquisitions.
Although organizational structure has been continuously improved in response to market
environmental changes, Vodafone Group has been committed to helping all employees reach
their full potential through ongoing training and development. “In the 2009 financial year,
Vodafone provided an aggregate of 230,000 days of training, an average of three days per
employee”, and “this training program was extended to all employees via an online interactive
course that has been translated into 11 languages and rolled out to 18 countries”.
 Taking advantage of Customer Relationship Management tools
Vodafone Group has developed the group-wide strategy that is associated with its better
understanding of the importance of the customer experience to its business success. Delivering
value-added products and services that can meet individual customer needs and widen the scope
of its relationship with its customers are essential to reshape its competitive environment.
Vodafone Group has standardized on Siebel CRM platforms across three geographies to collect,
analyze and share customer information across multi-channels, including customer service
agents, sales and marketing teams, to gain a 360 degree view of customers, and measure and
manage customer satisfaction, customer loyalty, revenue assurance, revenue growth and
profitability. Employees in Vodafone Group have access to a centralized repository for customer
information in the systems.
 Top Line Improvements
Vodafone Group has definitely had better understanding of the strategic values of IT to gain and
maintain competitive advantages from the viewpoint of both top line and bottom line
improvements. To improve top line, general telecommunication operators consider IT as sources
of innovative and differentiated products and services that they create and launch globally in a
timely manner. Vodafone Group has not used the cheaper price than other competitors to attract
new customers and retain existing customers to become the largest or the second largest mobile
operator in the most markets the Group has ever entered but it has focused on creating and
launching new value-added services that entice new customers. Arun Sarin, the former CEO of
Vodafone Group stated. We have rededicated ourselves to delighting our customers because we
believe this is the foundation for our continued success. We recognize that every customer
interaction provides another opportunity to win loyalty and that‟s why we continue to raise
standards on the quality of customer case in our call centers and our stores and the quality of our
networks. Key to delighting our customers is our ability to deliver superior voice and data
services according to differing customer needs. The choice of right IT at right time is necessary
to drive current and future returns and intellectual capital that articulate and structure all the
stakeholders‟ values, and Vodafone Group‟ s three key strategic IT initiatives have been sources
of competitive advantages to improve top line.
 Agility to adapt the advanced technologies
Telecommunication operators‟ agility to adapt the advanced technologies has a great impact on
innovative and differentiated products and services, including the converged services of network
data, services data and customer data available to improve customer experience in response to
the changing customer needs and market environment. Saxtoft (2008) argued that “competitive
advantages in the future convergent communications industry will be based on the organizational
ability of communications service providers to utilize the specific mix of network data, services
data and customer data available to each of the players in the market”. Vodafone‟s ability to
adapt new IT continuously ensures that their customers are able to “stay connected to the people
and the information that are central to their lives – via voice, text, instant messaging, e-mail,
music, communities, news, and applications both social and work related – whenever, wherever”
.Vodafone Group thus created Vodafone 360, Vodafone Vorteil, and Cloud Computing services
and the Group in turn can greatly improve customer experience, and eventually gain and
maintain its competitive advantages. Along with increasing bandwidth demands and a data
dominated traffic mix, the ability to optimize its network capacity according to the differentiated
products and services has been essential in improving quality of services for these services.
Vodafone launched „Vodafone 360‟, a suite of new Internet services for the mobile and PC that
gather all of customer‟s friends, communities, entertainment and personal favorites. Vodafone
360 encompass a universal contacts address book „Vodafone People‟ that automatically
synchronize all contacts from a customer phone, Facebook, Windows Live Messenger, and
Google Talk, and an online content and data management tool. Vodafone 360 brought together
many existing Vodafone mobile Internet initiatives under a common and intuitive service
umbrella. Vodafone 360 represents the new service standard to take everything back in Vodafone
and superimpose proprietary ownership over all service aspects while dispelling the notion that
mobile operators are unable to response to the full force of the innovation that Apple iPhone
brought to market. This is the first time a mobile operator has created an experience which can
compete against the iPhone standard of excellence and superior user interface.
Vodafone is now attempting to move into the fixed voice and broadband markets and has either
acquired fixed Internet Service Providers in some countries or formed partnerships in the other
countries where acquisitions are not feasible or not cost efficient. “The previously pure mobile
operator is now following a total communications strategy which includes mobile (cellular),
broadband (fixed) and wireless; it has been offering combined services, with fixed, mobile and
broadband services under a single bill”.
Cloud Computing has become popular in the telecommunications industry all over the world. It
is “a large-scale distributed computing paradigm that is driven by economies of scale, in which a
pool of abstracted, virtualized, dynamically-scalable, managed computing power, storage,
platforms, and services are delivered on demand to external customers over the Internet”, and“
has become the hottest technology in IT” .Vodafone Group announced a strategic partnership
with Decho Corporation to deliver a series of „Could Services‟ for both enterprise and consumer
markets. The first service to emerge across the Vodafone Group footprint is the „Vodafone PC
Backup‟ service that enables customers to save personal data from the PC to a remotely hosted
site. They are able to view and share the data from their account through the web browser of
their PC while reducing the need to transfer the data from one device to others. None of
Vodafone‟s key Tier 1 competitors has launched free PC backup and online storage aggressively
with consumer mobile broadband services and Vodafone Group is relatively staking leadership
in consumer Cloud Service provision. Emma (2009) argued that “A Vodafone-branded PC
backup service promises powerful value-added differentiation for the operator‟s mobile and
fixed broadband portfolio across its key European markers by year-end”. Vodafone Group can
continuously maintain its competitive advantages while launching a series of Cloud Services
faster than other competitors, in addition to existing PC backup and online storage services.
 Optimizing entire value chains and redefining industry
Optimizing entire value chains beyond Vodafone Group and its traditional suppliers, and
redefining industry are identified as sources of competitive advantages to create and launch
innovative and differentiated products and services. The telecommunications industry is
confronted with unprecedented challenges in breaking down traditional industry boundaries and
redefining industry in response to changing market environment while the Internet companies
such as Google, eBay and Yahoo have demonstrated business models that enable third parties to
develop new services by combining existing services to increase the value of the traditional and
original services. Service providers are no longer limited to the traditional voice and simple data
services but are comprised of content, application, and other service providers. To compete
against these new service providers, an effective service delivery framework is essential, to
deliver and maintain differentiated services beyond traditional boundaries, achieve time to
market, and conclude business agreements among all stakeholders.
 Group Technology
Vodafone Group‟s has driven the Group Technology initiatives that have managed and
controlled group-wide projects to orchestrate the move toward significant coordination and
identify and disseminate best practices to focus on expansion of service capacity while
replicating business models across a number of countries and maintaining cost efficiency.
Vodafone Group created two central functions, "Group Marketing (to drive revenue growth), and
Group Technology and Business Integration (to drive cost and scale benefits”, and “thy purpose
of Group Technology will be to lead the implementation of standardized architecture for
business process, information technology and network systems” (Hitt, Ireland and Hoskisson,
2008,). The initiatives have supported the third generation (3G) network rollout, the
enhancement and expansion of Vodafone Live service to Germany, Ireland, Italy, the
Netherlands, Portugal, Spain, Sweden and then UK, and the development of Vodafone Group‟s
business offering on a global basis. Vodafone Group has benefited from the effective and
efficient Group Technology initiative. First, Vodafone Group is given more strategic option for
marketing and sales of its products and services. Second, the time-to-market becomes shorter by
consolidating its development resources and sharing the solutions. Finally, cost reduction arises
from avoiding multiple development
 Bottom Line Improvements
On the other hands, Vodafone Group has capitalized on IT capabilities to implement its strategic
initiative, „One Vodafone‟ program, which transforms 16 operating companies into a united
operation to achieve streamlined cost effective and efficient group. Vodafone Group has
embedded IT sharing, outsourcing, and centralization and consolidation strategies in order to
achieve the objectives of the program. Radio access network are shared with the other mobile
operator, Orange, IT application development and maintenance are outsourced to IT outsourcing
vendors, IBM and EDS, and supply chain management function and European data centers are
centralized and consolidated to Vodafone Group.
 Using IT initiatives to transform the operator
The „One Vodafone‟ program was focused on key initiatives to integrate business activities to
leverage economies of scale and scope of Vodafone group to transform the Group into a
streamlined, cost-effective and efficient organization while standardizing designs and processes,
reducing duplication, centralizing and consolidating certain functions and sharing best practices
across operating companies. . The program was targeted at achieving £2.5 billion of annual pre
tax operating free cash flow improvements in Vodafone Group‟s controlled mobile business by
the end of March 2008. Vodafone Group predominantly embedded IT sharing, outsourcing, and
centralization and consolidation strategies to achieve the objectives of One Vodafone program
that transform multiple operating companies around the globe in Vodafone Group into a
streamlined, cost effective and efficient organization.
 Centralized Supply Chain Management
A supply chain is a series of activities in which materials move through from initial suppliers to
the final customers. In Vodafone Group, handsets, network equipment, marketing and IT
services account for the majority of Vodafone‟s operational expenditures. Centralized Group‟s
Global Supply Chain Management (GSCM) team has been driving „One SCM‟ to leverage its
scale to significantly reduce operational expenditures. One SCM delivers values through robust
integration across all Vodafone‟s operating companies to centralize and manage most of the
Group‟s relationships with their suppliers. A consistent supplier performance management
process has been implemented across the Vodafone Group‟s mobile operations and key suppliers
are evaluated in the six areas “covering aspects of financial stability, technological and
commercial criteria, delivery and quality management requirements and corporate
responsibility”.
PART-4
4.1 Financial projections of Vodafone
Income statement
Profit & Loss statement
Profit & Loss
Year Ended 31 March 2014 2013 2012 2011 2010
£ millions
Turnover 38346.0 38041.0 46417.0 45884.0 44472.0
Operating Profit -4191.0 -2777.0 6224.0 537.0 4738.0
Net Interest -1208.0 -1291.0 -1476.0 880.0 -796.0
Profit Before Tax -5270.0 -3483.0 9549.0 9498.0 8674.0
Profit After Tax 11312.0 -3959.0 7003.0 7870.0 8618.0
Total Dividend n/a n/a n/a n/a n/a
Retained Profit / Loss n/a n/a n/a n/a n/a
Key Figures
Year Ended 31 March 2014 2013 2012 2011 2010
Earnings Per Share Basic (p) 42.10 -15.66 13.74 15.20 16.44
Earnings Per Share Diluted (p) 41.77 -15.66 13.65 15.11 16.36
Earnings Per Share Adjusted (p) 17.54 20.12 14.91 16.75 16.11
Earnings Per Share Growth (%) -13 35 -11 4 -6
Total Dividend (p) 11.00 10.19 9.52 8.90 8.31
Operating Margin (%) -11 -7 13 8 11
ROCE (%) -7 -2 19 15 16
Dividend Cover 1.59 1.97 1.57 1.88 1.94
Dividend Yield 5.00 5.20 5.30 4.80 5.20
Price / Earnings Ratio 12.60 9.70 12.00 11.00 9.80
Dividend Per Share Growth (%) 8 7 7 7 7
Balance sheet of Vodafone
Financial ratio analysis
Vodafone Group‟s financial performances are analyzed by utilizing the liquidity, profitability
and debt management ratios, compared to the industry norm cited from Hoover‟s, Strategic
Analytics, and Ycharts.
Liquidity ratio
 Current ratio
Current assets normally are comprised of cash, accounts receivable, inventories, and marketable
securities. Current liabilities include accounts payable, short-term notes payable, current portion
of long-term debt, accrued taxes, wage, and other accrued expenses. The current ratio indicates
“the extent to which current liabilities are covered by those assets expected to be converted to
cash in the near future”. The current ratio is calculated by dividing current assets by current
liabilities. A current ratio of one means that book value of current assets is exactly the same as
book value of current liabilities. In general, investors look for a company with a current ratio of
2:1, meaning current assets twice as large as current liabilities. A current ratio less than one
indicates the company might have problems meeting short-term financial obligations. If the ratio
is too high, the company may not be efficiently using its current assets or short term financing
facilities.
Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010
Current assets 24,722.00m 21,649.00m 20,025.00m 17,003.00m 14,219.00m
Current
liabilities
25,039.00m 28,369.00m 24,025.00m 27,075.00m 28,616.00m
Current Ratio 0.98 0.76 0.83 0.62 0.49
Graph of Current Assets & Current Liabilities
14,219.00
17,003.00
28,616.00
27,075.00
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
31/3/2010 31/3/2011
Financial ratio analysis
Vodafone Group‟s financial performances are analyzed by utilizing the liquidity, profitability
and debt management ratios, compared to the industry norm cited from Hoover‟s, Strategic
Analytics, and Ycharts.
Liquidity ratio
 Current ratio
Current assets normally are comprised of cash, accounts receivable, inventories, and marketable
securities. Current liabilities include accounts payable, short-term notes payable, current portion
of long-term debt, accrued taxes, wage, and other accrued expenses. The current ratio indicates
“the extent to which current liabilities are covered by those assets expected to be converted to
cash in the near future”. The current ratio is calculated by dividing current assets by current
liabilities. A current ratio of one means that book value of current assets is exactly the same as
book value of current liabilities. In general, investors look for a company with a current ratio of
2:1, meaning current assets twice as large as current liabilities. A current ratio less than one
indicates the company might have problems meeting short-term financial obligations. If the ratio
is too high, the company may not be efficiently using its current assets or short term financing
facilities.
Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010
Current assets 24,722.00m 21,649.00m 20,025.00m 17,003.00m 14,219.00m
Current
liabilities
25,039.00m 28,369.00m 24,025.00m 27,075.00m 28,616.00m
Current Ratio 0.98 0.76 0.83 0.62 0.49
Graph of Current Assets & Current Liabilities
17,003.00
20,025.00
21,649.00
24,722.00
27,075.00
24,025.00
28,369.00
25,039.00
31/3/2011 31/3/2012 31/3/2013 31/3/2014
current assets
current liabilites
Linear (current assets)
Linear (current liabilites)
Financial ratio analysis
Vodafone Group‟s financial performances are analyzed by utilizing the liquidity, profitability
and debt management ratios, compared to the industry norm cited from Hoover‟s, Strategic
Analytics, and Ycharts.
Liquidity ratio
 Current ratio
Current assets normally are comprised of cash, accounts receivable, inventories, and marketable
securities. Current liabilities include accounts payable, short-term notes payable, current portion
of long-term debt, accrued taxes, wage, and other accrued expenses. The current ratio indicates
“the extent to which current liabilities are covered by those assets expected to be converted to
cash in the near future”. The current ratio is calculated by dividing current assets by current
liabilities. A current ratio of one means that book value of current assets is exactly the same as
book value of current liabilities. In general, investors look for a company with a current ratio of
2:1, meaning current assets twice as large as current liabilities. A current ratio less than one
indicates the company might have problems meeting short-term financial obligations. If the ratio
is too high, the company may not be efficiently using its current assets or short term financing
facilities.
Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010
Current assets 24,722.00m 21,649.00m 20,025.00m 17,003.00m 14,219.00m
Current
liabilities
25,039.00m 28,369.00m 24,025.00m 27,075.00m 28,616.00m
Current Ratio 0.98 0.76 0.83 0.62 0.49
Graph of Current Assets & Current Liabilities
24,722.00
current assets
current liabilites
Linear (current assets)
Linear (current liabilites)
Profitability ratio
 EBITDA margin ratio
EBITDA, Earnings before Interest, Taxes, Depreciation and Amortization, to sales ratio is a
measure of cash flows from the entity‟s operations. A robust network infrastructure is a source
of competitive advantages for mobile communications companies but they generally report large
losses due to hugely spending capital expenditures to construct the network infrastructure.
EBITDA enables the companies to discuss their profitability of core business operations while
deducting the huge amount of interest, taxes, and capital expenses. EBITDA margin ratios are
stable but relatively lower than the industry norm due to the impact of business acquisitions and
disposals, and foreign exchange associated with its global expansion.
Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010
Revenue 38,346.00m 38,041.00m 46,417.00m 45,884.00m 44,472.00m
EBITDA 12,831.00m 13,566.00m 14,606.00m 14,670.00m 14,735.00m
EBITDA Margin 33.4% 35.6% 31.4% 31.9% 33.1%
Graph of Revenue
Return on Common Equity (ROE) ratio
Return on equity (ROE) measures the rate of return on the money invested by common stock
owners and retained by the company thanks to previous profitable years. It demonstrates a
company's ability to generate profits from shareholders' equity (also known as net assets or assets
Minusliabilities).
44472
45884
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
31/3/2010 31/3/2011
Profitability ratio
 EBITDA margin ratio
EBITDA, Earnings before Interest, Taxes, Depreciation and Amortization, to sales ratio is a
measure of cash flows from the entity‟s operations. A robust network infrastructure is a source
of competitive advantages for mobile communications companies but they generally report large
losses due to hugely spending capital expenditures to construct the network infrastructure.
EBITDA enables the companies to discuss their profitability of core business operations while
deducting the huge amount of interest, taxes, and capital expenses. EBITDA margin ratios are
stable but relatively lower than the industry norm due to the impact of business acquisitions and
disposals, and foreign exchange associated with its global expansion.
Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010
Revenue 38,346.00m 38,041.00m 46,417.00m 45,884.00m 44,472.00m
EBITDA 12,831.00m 13,566.00m 14,606.00m 14,670.00m 14,735.00m
EBITDA Margin 33.4% 35.6% 31.4% 31.9% 33.1%
Graph of Revenue
Return on Common Equity (ROE) ratio
Return on equity (ROE) measures the rate of return on the money invested by common stock
owners and retained by the company thanks to previous profitable years. It demonstrates a
company's ability to generate profits from shareholders' equity (also known as net assets or assets
Minusliabilities).
45884 46417
38041 38346
31/3/2011 31/3/2012 31/3/2013 31/3/2014
Revenue
Revenue
Linear (Revenue)
Profitability ratio
 EBITDA margin ratio
EBITDA, Earnings before Interest, Taxes, Depreciation and Amortization, to sales ratio is a
measure of cash flows from the entity‟s operations. A robust network infrastructure is a source
of competitive advantages for mobile communications companies but they generally report large
losses due to hugely spending capital expenditures to construct the network infrastructure.
EBITDA enables the companies to discuss their profitability of core business operations while
deducting the huge amount of interest, taxes, and capital expenses. EBITDA margin ratios are
stable but relatively lower than the industry norm due to the impact of business acquisitions and
disposals, and foreign exchange associated with its global expansion.
Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010
Revenue 38,346.00m 38,041.00m 46,417.00m 45,884.00m 44,472.00m
EBITDA 12,831.00m 13,566.00m 14,606.00m 14,670.00m 14,735.00m
EBITDA Margin 33.4% 35.6% 31.4% 31.9% 33.1%
Graph of Revenue
Return on Common Equity (ROE) ratio
Return on equity (ROE) measures the rate of return on the money invested by common stock
owners and retained by the company thanks to previous profitable years. It demonstrates a
company's ability to generate profits from shareholders' equity (also known as net assets or assets
Minusliabilities).
Revenue
Linear (Revenue)
ROE shows how well a company uses investment funds to generate growth. Return on equity is
useful for comparing the profitability of companies within a sector or industry. Investors
generally are interested in company's that have high, increasing returns on equity.
Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010
Revenue 38,346.00m 38,041.00m 46,417.00m 45,884.00m 44,472.00m
Net income 11.15B 4.20B 6.96B 7.97B 8.65B
Total Assets 121,840.00m 138,324.00m 139,576.00m 151,220.00m 156,985.0m
Total Equity 71,781.00m 72,488.00m 78,202.00m 87,561.00m 90,810.00m
ROE 76.38% 0.53% 8.82% 8.74% 10.02%
Graph of Net Income
8.65
7.97
0
2
4
6
8
10
12
31/3/2010 31/3/2011
ROE shows how well a company uses investment funds to generate growth. Return on equity is
useful for comparing the profitability of companies within a sector or industry. Investors
generally are interested in company's that have high, increasing returns on equity.
Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010
Revenue 38,346.00m 38,041.00m 46,417.00m 45,884.00m 44,472.00m
Net income 11.15B 4.20B 6.96B 7.97B 8.65B
Total Assets 121,840.00m 138,324.00m 139,576.00m 151,220.00m 156,985.0m
Total Equity 71,781.00m 72,488.00m 78,202.00m 87,561.00m 90,810.00m
ROE 76.38% 0.53% 8.82% 8.74% 10.02%
Graph of Net Income
7.97
6.96
4.2
11.15
31/3/2011 31/3/2012 31/3/2013 31/3/2014
Net income
ROE shows how well a company uses investment funds to generate growth. Return on equity is
useful for comparing the profitability of companies within a sector or industry. Investors
generally are interested in company's that have high, increasing returns on equity.
Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010
Revenue 38,346.00m 38,041.00m 46,417.00m 45,884.00m 44,472.00m
Net income 11.15B 4.20B 6.96B 7.97B 8.65B
Total Assets 121,840.00m 138,324.00m 139,576.00m 151,220.00m 156,985.0m
Total Equity 71,781.00m 72,488.00m 78,202.00m 87,561.00m 90,810.00m
ROE 76.38% 0.53% 8.82% 8.74% 10.02%
Graph of Net Income
Net income
Debt management ratio
The debt ratio measures the percentage of funds provided by noncurrent liabilities and equit
Ehrhardt and Brigham (2009) argued that “creditors prefer low debt ratios because the lower the
ratio, the greater the cushion against creditors‟ losses in the event of liquidation”, and
“stockholders, on the other hand, may want more leverage because it magnifies expected
earnings” .
Leverage ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's
assets. A low debt to equity ratio indicates lower risk, because debt holders have less claims on
the company's assets. A debt to equity ratio of 5 means that debt holders have a 5 times more
claim on assets than equity holders.
A high debt to equity ratio usually means that a company has been aggressive in financing
growth with debt and often results in volatile earnings.
It is also known as Debt/Equity Ratio, Debt-Equity Ratio, and D/E Ratio.
Formula Debt to Equity = (Long Term Debt + Current Portion of Long Term Debt) / Total
Shareholders' Equity
Mar10 Mar11 Mar12 Mar13 Mar14
deb2equity .48 .44 .44 .43 .56
Price to Earnings Ratio
The price to earnings ratio (PE Ratio) is the measure of the share price relative to the annual net
income earned by the firm per share. PE ratio shows current investor demand for a company
share. A high PE ratio generally indicates increased demand because investors anticipate
earnings growth in the future. The PE ratio has units of years, which can be interpreted as the
number of years of earnings to pay back purchase price.
PE ratio is often referred to as the "multiple" because it demonstrates how much an investor is
willing to pay for one dollar of earnings. PE Ratios are sometimes calculated using estimations
of next year's earnings per share in the denominator. When this happens, it is usually noted.
Price to Earnings Ratio = Price / Earnings Per Share (EPS)
Mar10 Mar11 Mar12 Mar13 Mar14
PE 6.32 7.95 8.63 155.20 .99
4.2 overall evaluation of strategies
Vodafone emerging markets are performing well, although vodafone mature European markets
continue to face challenging conditions. However, company have continued to make good
progress in delivering long-term strategy, by building firm foundations for the future with
substantial investments in Vodafone Red, Project Spring and unified communications. It has
been a year of substantial strategic progress. The sale of Verizon Wireless stake has rewarded
shareholders for their support, and enabled the acceleration of strategy through the acquisition of
Kabel Deutschland, the pending acquisition of Ono and our Project Spring investment
programme. Vodafone operational performance has been mixed. The Group’s emerging markets
businesses have performed strongly throughout the year: company executed their strategy well
and have successfully positioned themselves for the rapid growth in data. In Europe, they are
continue to face competitive, regulatory and macroeconomic pressures, but they have taken
steps to improve their commercial performance, particularly in Germany and Italy, and are
beginning to see encouraging early signs.
 Verizon Wireless transaction
The sale of vodafone 45% interest in Verizon Wireless, the leading mobile operator in the United
States, was the culmination of a highly successful 14 year investment which began when Verizon
and Vodafone entered
into a partnership to create Verizon Wireless in 2000.They had been very happy to stay invested
in the business over the years, despite their minority position, because of the strong growth and
returns generated, and the attractiveness of the US market. However, the Board viewed the offer
of US$130 billion as a very attractive price at which to exit. The completion of the transaction
enabled company to return a record US$85 billion to shareholders, while retaining ample
financial flexibility to pursue our own strategy both organically and through targeted
acquisitions.
 Strategic progress
vodafone had made very substantial progress on their strategy in the past year, despite the
significant challenges faced in Europe. With the acquisition of Kabel Deutschland in Germany
and the planned purchase of Ono in Spain, their continued fibre build in Portugal and Spain, and
their fibre plans in Italy, allied to last year’s acquisition of Cable & Wireless Worldwide in the
UK, they are becoming a leader in unified communications across Europe. This enables them to
access a large and growing fixed revenue pool where their market share is currently much lower
than in mobile, while also helping company defend mobile business from converged offers.They
are continue to provide a market-leading network experience in most of our markets, and now
have 4.7 million 4G customers across 14 countries – all major European markets, as well as
South Africa, Australia and New Zealand. Early experience from 4G shows us that customers
use roughly twice as much data compared to 3G data usage, driven principally by video
streaming.
Vodafone aim to be five years from now
 Project Spring
Project Spring is our organic investment programme which will allow us to accelerate and extend
our strategic priorities through investment in mobile and fixed networks, products and services,
and our retail platform. Announced alongside the Verizon transaction in September 2013, Project
Spring will strengthen further our network and service differentiation. The transition to 4G and
unified communications, coupled with an improved economic outlook for Europe, lead us to
believe Vodafone has a unique opportunity to invest now. We expect total investments, including
Project Spring, to be around £19 billion over the next two years. The main elements of our
investment are:
 4G in Europe: we aim to reach 91% population coverage by March 2016.
 3G in emerging markets: with 95% population coverage in targeted urban areas in India
by March 2016.
 Next-generation fixed line infrastructure: laying fibre to more base stations and deep
into residential areas across Europe and in selected emerging market urban areas.
 Development of enterprise products and services: Extending our M2M reach to 75
countries and rolling out hosting and IP-VPN services internationally; and investment in
our retail estate: modernising 8,000 of our stores to improve the customer experience.
4.3 Monitoring & Control
The Monitoring and Controlling process oversees all the tasks and metrics necessary to ensure
that the approved and authorized project is within scope, on time, and on budget so that the
project proceeds with minimal risk. This process involves comparing actual performance with
planned performance and taking corrective action to yield the desired outcome when significant
differences exist. Monitoring and Controlling process is continuously performed throughout the
life of the project.
Financial and accounting sector: - The financial management information system has
become an integral part of every small and big business companies. FMIS helps to compile
all the account related information from the different departments of the company including
the operations, sales and marketing, HR and makes it available in an easy format to the chief
financial officer. The CFO then analysis the profit and losses of the company, past and
present financial transactions made by the company and also uses it to control and monitor
the available funds for the right purpose.Vodafone Essar’s financial department uses the most
competent SAP system to manage the accounts and compile the information in a fast and
easy way.
 SAP- Initially the full form was “System analyse und programmentwicklung” in
German language. It is actually System analysis and programme development.
System working and benefits-
 General ledger- this system automatically makes an entry of all the transactions in the
general ledger. It also side by side updates this information in the specific accounts like
trade receivables, trade payables, personal, sales, inventory, etc and these all accounts
together make the “chart of accounts”. Hence the system helps in keeping a permanent
record of the accounts.
 Cash management- helps in balancing the cash inflow and outflow. Highlights the area
where cash is used up like in buying high cost raw materials, inventory expenses, etc.
Depending on the company’s expenses it can regulate the price at which Vodafone sells its
sim cards, internet services and also helps deciding the roaming charges, call charges,
message schemes, plans, etc.
 Budget planning- modifies the financial ratios to help predict the future scenarios and also
in setting the financial goals for the company.
 Financial reporting- the system not only uploads the transactions directly in the general
ledger but it also makes financial statements used for internal reports and share holder use.
Compliance with the government regulations, accounting standards and auditing
requirements are also made easy.
 Reduced finance costs and workload- initially before the invention of computers
accounts were maintained in account books and were written manually. To reduce this
tedious work computers came into the market but did not possess an advanced
technology to maintain complex accounts. Later came, the SAP system which not only
could manage the various accounts but also could automatically upload any transactions
occurring in every account. This reduced the time and cost of writing and managing
accounts. In global companies like Vodafone which extends its branches all over the
world SAP system serves as a boon for managing the finances.
 Other benefits- making trial balance reports, profit and loss reports, balance sheet,
generating bills according to the customer chosen schemes and plans, etc.
Operations support system (OSS) and Business support system (BSS)
Vodafone and many other telecommunication companies use these systems mainly to manage
the billing procedure which were done manually many decades ago. These systems mainly help
in managing networking components, provisioning services and for billing in the accounting
sector.
Telecommunications billing is the process of adding together rated calls or services for a certain
user or group of users, applying discounts and preparing the data for invoicing.
 OSS in processing CDR- Call detail record (CDR) or Station message detail recording
(SMDR) is a file containing all the necessary information regarding the time of call, origin
of the call, call duration, call charge, total usage time in the billing period and the free
minutes left in the billing period. If Vodafone is providing some of its customers with
itemized bills then CDR will show up in each bill in a format similar to the long distance
itemized bill generated by a conventional telecom company. In a telephone exchange, a
CDR contains information about all the calls passing through the exchange. The CDRs are
generated by Automatic Message Accounting (AMA) and processed by the operations
support system (OSS). With the help OSS the CDR, RAP and TAP data into simple binary
encoded data into XML or ASCII. (Refer appendix 2.0).
 AMDOCS- Amdocs is a global company which provides Vodafone with its billing
solutions through the OSS and BSS. The company leads in providing customer
relationship management software but also plays an important role in providing financial
solutions. The various features provided by the company are-
 Convergent billing system-The system assists Vodafone service providers with
appropriate charging and billing system. By this system provided by Amdocs, the
hardware and software costs were reduced by 70% and comparison and combination of
prepaid and postpaid services was possible.
 Invoicing- The system has the capabilities of operating multiple currency bills, managing
scheduled as well as on- demand bills, combines prepaid and postpaid bill and also
includes discounts and charges in a billing cycle.
 Accounts receivable- The system integrates a third party general ledger and enables
automatic accounting processes according to the standards and policies. Also manages
customer account’s balance by performing every transactions like fund transfer,
adjustments, back outs and other financial activities.
SAS- Statistical Analysis Software Financial Intelligence
This software is mainly used to generate financial reports at a faster rate, in forecasting the future
scenario, risk management and simulation problems are also tackled well by this system. SAS
Financial Intelligence components help in increasing the profit margins and further assist in
improving the accuracy of the financial reports and balance sheets. There are 4 components of
SAS Financial Intelligence are:-
 SAS Activity- based management- mainly helps by identifying the capital consuming
areas and capital generating areas and helps in making decisions that streamline processes.
 SAS Financial management-budgeting and planning is done by this system. Assist in
making several reports, financial statements and handling various accounts.
 SAS Profitability management- provides solutions to increasing profits.
 SAS Strategy management- helps the company gain focus on the main goals and to
remove the flawed strategies which may prove to be very expensive for the company.
 SAS Financial Management- the system is very useful in going through the accounts of
the company in no time and making future predictions for further business deals.
Processes and generates financial reports very quickly, communicates the planning
strategies, budgets, annual reports among various departments of the company making the
work easier at every business level. The system also generates reports according to the
guidelines mentioned in the IFRS (International Financial Reporting Standards) and sends
a copy of the report to GAAP (Generally Accepted Accounting Principles) and IFRS and
so there is no need to re check the validation of the reports.
PART-5
5.1 Vodafone customer base:
Britain-based Vodafone is the second largest mobile service provider on the planet after China
Mobile. The company has about 435 million subscribers in 26 countries around the world.
Recently, Vodafone reported group revenue of £10.2 billion ($17.3 billion) after the quarter that
ended in June 2014. While this was up 6.2% on an absolute basis year-on-year given the strong
pound currency, it was down 4.4% on organic basis. Organic revenue measures comparable
performance, therefore excludes any M&A activity and fluctuation in foreign exchange rates.
The company did not disclose profit figures in its most recent financial report but it had a net
profit of £4.6 billion ($7.8 billion) at the end of financial year 2013-14. This excluded the money
it made from selling the Verizon Wireless stake in US. Vodafone provides cellular network voice
and data services in the following countries – Germany, Italy, United Kingdom, Spain,
Netherlands, Ireland, Portugal, Romania, Greece, Czech Republic, Hungary, Albania, Malta,
India, Turkey, Australia, Egypt, New Zealand, Qatar, Ghana, South Africa, Tanzania, Congo,
Mozambique, Lesotho and Kenya. Some of their operations in these countries are through joint
ventures. Vodafone also runs fixed home, enterprise and cable networks in a few regions and
these operations form about 15% of the group’s revenue. Despite having big presence across
various regions, Vodafone has faced multiple challenges in the past few years.
Vodafone’s customer base of 435 million in various parts of world is its biggest asset. It is either
the market leader or is among the top 3 service providers in every country. Such strong position
often implies financial leverage, larger capacity to absorb risks and greater capability to steer the
market direction.
Geographically diversified business – Looking closely at the countries listed above, it is easy to
conclude that Vodafone has a presence in all kinds of mobile markets. Developed markets like
Germany and UK bring bulk of revenue. Then there are markets like India that have immense
growth potential both in voice and data. So declining business in one region can be compensated
by growth in another.
Developed and advanced network – While not necessarily the trailblazer of LTE network launch
in its areas of operation, Vodafone deployed LTE and high-speed wireless networks in most of
its markets within a few years of spectrum allocation or ecosystem stabilization. In 2010,
Vodafone had LTE running in Germany for the first time. Within the next 2 years, they followed
it up by launching LTE in Portugal, Romania, Spain, UK, Australia, South Africa and many
other nations. Networks in India, Egypt and Turkey are also in the process of upgradation.
Similarly, in the first half of the last decade, the operator was aggressive in providing 3G
services. The overall perception of Vodafone’s wireless network is positive in most countries.
Strong brand recognition – Aggressive strategy, creative advertising, decent customer service
and employee-friendly policies have helped Vodafone in cementing its place among the better
brands of the world. This makes it easy for them to win new customers and retain the existing
base.
Number of Vodafone mobile customers in 2014, by country/market (in millions)
0
20
40
60
80
100
120
140
160
180
mobile customers in millions
brands of the world. This makes it easy for them to win new customers and retain the existing
base.
Number of Vodafone mobile customers in 2014, by country/market (in millions)
mobile customers in millions
mobile customers in millions
brands of the world. This makes it easy for them to win new customers and retain the existing
base.
Number of Vodafone mobile customers in 2014, by country/market (in millions)
mobile customers in millions
Board of directors
Name Age Since Current Position
Gerard Kleisterlee 67 2011 Non-Executive Chairman of the Board
Vittorio Colao 52 2008 Chief Executive, Executive Director
Nicholas Read 48 2014 Chief Financial Officer, Director
Paolo Bertoluzzo 47 2012 Chief Executive Officer, Southern Europe
Philipp Humm 54 2012 Chief Executive Officer, Northern & Central Europe
Serpil Timuray 44 2014 Chief Executive, Africa, Middle East and Asia-Pacific
Stephen Pusey 52 2009 Chief Technology Officer, Executive Director
Rosemary Martin 54 2010 Group General Counsel, Company Secretary
Ronald Schellekens 50 2009 Group Human Resources Director
Warren Finegold 57 2009 Group Strategy and Business Development Director
Nicholas Jeffery 41 2013 Group Enterprise Director
Matthew Kirk 52 2009 Group External Affairs Director
Crispin Davis 2014 Non-Executive Director
Clara Furse 57 2014 Non-Executive Director
Valerie Gooding 62 2014 Non-Executive Director
Renee James 49 2011 Non-Executive Independent Director
Samuel Jonah 2009 Non-Executive Independent Director
Omid Kordestani 49 2013 Non-Executive Independent Director
Nick Land 66 2006 Non-Executive Independent Director
Luc Vandevelde 63 2012 Senior Non-Executive Independent Director
Philip Yea 2005 Non-Executive Independent Director
Anthony Hamilton Senior Manager - Investor Relations
BIOGRAPHIES
Name Description
Gerard Kleisterlee Mr. Gerard J. Kleisterlee is Non-Executive Chairman of the Board of
Vodafone Group Plc. Gerard Kleisterlee, aged 67, became Chairman of
Vodafone Group Plc on 26 July 2011 at the conclusion of the AGM,
having previously served as a non-executive member of the Board. He
retired as President/Chief Executive Officer and Chairman of the Board of
Management and the Group Management Committee of Koninklijke
Philips Electronics N.V. (‘Philips’) on 31 March 2011 after a career with
Philips spanning three decades. He has been a member of the Daimler AG
Supervisory Board since April 2009, a non-executive director of the
Supervisory Board and member of the Audit Committee .
Vittorio Colao Mr. Vittorio Colao is Chief Executive, Executive Director of Vodafone
Group Plc. Vittorio Colao, Chief Executive, aged 52, was appointed Chief
Executive of Vodafone Group Plc after the AGM on 29 July 2008. He
joined the Board in October 2006 as Chief Executive, Europe and Deputy
Chief Executive. The early part of his career was spent in the Milan office
of McKinsey & Company working on media, telecommunications and
industrial goods, with additional responsibility for recruitment. In 1996 he
joined Omnitel Pronto Italia, which subsequently became Vodafone Italy,
and he was appointed Chief Executive in 1999. He was then appointed
regional Chief Executive Officer, Southern Europe for Vodafone Group
Plc in 2001, became a member of the Board in 2002 and was appointed to
the role of Regional Chief Executive Officer for Southern Europe, Middle
East and Africa for Vodafone in 2003. In 2004 he left Vodafone to join
RCS MediaGroup, the leading Italian publishing company, where he was
Chief Executive until he rejoined Vodafone as CEO, Europe. He sits on
the International Advisory Board of Bocconi University, Italy and is a
Member of the Steering Committee of the European Round Table of
Industrialists.
Nicholas Read Mr. Nicholas Jonathan Read has been appointed as Chief Financial
Officer, Director of Vodafone Group Plc., effective April 1, 2014. He has
been appointed as Chief Financial Officer - Designate of the Company
effective January 1, 2014 until April 1, 2014. He was appointed to the
position of Chief Executive Officer, Asia Pacific and Middle East Region
and joined the Executive Committee in November 2008. His role was
then expanded to include Africa in October 2010. Nick joined Vodafone
in 2001 and has held a variety of senior roles including Chief Financial
Officer and Chief Commercial Officer of Vodafone Limited, the UK
operating company, and was appointed Chief Executive Officer of
Vodafone Limited in early 2006. Prior to joining Vodafone, he held
senior global finance positions with United Business Media plc and
Federal Express Worldwide.
Paolo Bertoluzzo Mr. Paolo Bertoluzzo has been appointed as Chief Executive Officer,
Southern Europe of Vodafone Group Plc., effective August 1, 2012.
Paolo Bertoluzzo, aged 47, Group Chief Commercial and Operations
Officer, was appointed to the Executive Committee with effect from 1
August 2012, when he became Chief Executive Officer, Southern Europe.
He became Chief Executive Officer of Vodafone Italy in 2008, a role he
continues to hold. He has also been a member of the Board of Vodafone
Italy since 2006. He joined Vodafone in 1999, and held the post of Chief
Commercial Officer (2007), Chief Operating Officer (2006), and led the
Consumer Division of Vodafone Italy (2005). He was a member of the
Board of Vodacom from January 2010 to September 2012 and served as a
Board member of Vodafone Ireland between November 2005 and
February 2007. Paolo is Deputy Chairman of Asstel, the trade association
representing the interests of telecommunications companies members of
Confindustria (the Confederation of Italian Industry), and sits on the
Board of Confindustria Digitale, the industrial federation promoting
digital economy in Italy. After graduating in 1990 in Management
Engineering from the Politecnico di Milano, he obtained an MBA from
INSEAD at Fontainbleau in France in 1994 and began his career in
management consulting, working in Italy and the United States.
Philipp Humm Mr. Philipp Humm has been appointed as Chief Executive Officer,
Northern & Central Europe of Vodafone Group Plc., effective October 1,
2012. Philipp Humm, aged 54, Regional CEO Europe, joined Vodafone
as Chief Executive Officer, Northern and Central Europe and was
appointed to the Executive Committee with effect from 1 October 2012.
Before taking up this role, he was President and CEO of T-Mobile USA.
Previously, he was Chief Regional Officer Europe and a member of the
Executive Committee of T-Mobile International and prior to that, CEO
and Chief Sales Officer for T-Mobile Germany. His past experience
includes time with McKinsey & Company; the German grocery retailer,
Tengelmann, where he became CEO of Plus, their food discounter; and
Amazon, where he held roles as Managing Director of Amazon Germany
and France and Vice President Europe. He began his career at Procter &
Gamble.
Serpil Timuray Ms. Serpil Timuray has been appointed as Chief Executive, Africa,
Middle East and Asia-Pacific of Vodafone Group PLC., effective January
1, 2014. She was appointed Chief Executive of Vodafone Turkey in 2009.
She was appointed as a Director on the Board of Vodacom Group in
South Africa in September 2012. Previously General Manager with
Danone Turkey, Serpil Timuray began her career with Procter and
Gamble. She will be succeeded as Vodafone Turkey Chief Executive by
Gokhan Ogut who is currently Vodafone Turkey Chief Commercial and
Operations Officer.
Stephen Pusey Mr. Stephen C. Pusey is Chief Technology Officer, Executive Director of
Vodafone Group Plc. He joined Vodafone in September 2006 and the
Board with effect from 1 June 2009. He is responsible for all aspects of
Vodafone’s networks, IT capability, research and development. Prior to
joining Vodafone, he held the positions of Executive Vice President and
President, Nortel EMEA, having joined Nortel in 1982, gaining a wealth
of international experience across both the wireline and wireless
industries and in business applications and solutions. Prior to Nortel, he
spent several years with British Telecom. Stephen is a graduate of the
Advanced Management Program at Harvard University.
Rosemary Martin Ms. Rosemary E. S. Martin is Group General Counsel, Company
Secretary of Vodafone Group Plc., since March 2010. She previously
served as CEO of the Practical Law Group, having previously spent 11
years with Reuters Group Plc in various company secretary and legal
roles, with the last five years as Group General Counsel and Company
Secretary. Before joining Reuters, she was a partner with Mayer, Brown,
Rowe & Maw. Rosemary was admitted as a solicitor in 1984 and holds a
degree in Philosophy and Literature and an MBA in Legal Practice. She is
a director of several UK institutions including the Legal Services Board
and the Institute of Chartered Accountants of England and Wales
Corporate Governance Committee. She is also a non-executive director of
HSBC Bank Plc (the European arm of HSBC Group), and a former
member of the Financial Services Authority’s Listing Group Advisory
Committee.
Ronald Schellekens Mr. Ronald Adrianus Wilhelmus Schellekens is Group Human Resources
Director of Vodafone Group Plc. Ronald Schellekens, aged 49, Group HR
Director, joined Vodafone and the Executive Committee in January 2009.
He is responsible for the Vodafone Human Resource Management
function, as well as Health & Safety and Vodafone's Property and Real
Estate. Prior to joining Vodafone, Ronald was Executive Vice President
Human Resources for Royal Dutch Shell Plc’s global downstream
business. Prior to working for Shell, he worked for PepsiCo for nine years
in various international, senior human resources roles, including
assignments in Switzerland, Spain, South Africa, the UK and Poland. In
his last role, he was responsible for the Europe, Middle East & Africa
region for PepsiCo Foods International. Prior to PepsiCo, he worked for
nine years for AT&T in Human Resources roles in the Netherlands and
Poland.
Warren Finegold Mr. Warren Finegold is Group Strategy and Business Development
Director of Vodafone Group Plc. Warren Finegold, aged 56, joined the
Executive Committee in April 2006 as Chief Executive, Global Business
Development with responsibility for mergers and acquisitions and
business development. He assumed his current posiiton in August 2009
when his role was expanded to include Group Strategy. He started his
career with Hill Samuel & Co. Limited as an Executive in the Corporate
Finance department, advising clients on mergers and acquisitions. He then
moved to Goldman Sachs International in 1986 where he held positions in
New York and London. Prior to joining Vodafone, he was a Managing
Director of UBS Investment Bank where he held a number of senior
positions, most recently as head of its technology team in Europe.
Nicholas Jeffery Mr. Nicholas Jeffery is Group Enterprise Director of Vodafone Group
PLC., since January 2013. Prior to this, he was Chief Executive of Cable
& Wireless Worldwide. Nick joined Vodafone in 2004 and was appointed
Chief Executive of Vodafone Global Enterprise in 2006. He began his
career with Cable & Wireless plc (Mercury Communications) in 1991 and
led the company’s UK and international markets business units.
Matthew Kirk Mr. Matthew Kirk is Group External Affairs Director of Vodafone Group
Plc. Matthew Kirk, aged 52, Group External Affairs Director, was
appointed to his current position and joined the Executive Committee in
March 2009. Matthew joined Vodafone in 2006 as Group Director of
External Relationships. Prior to that, he was a member of the British
Diplomatic Service for more than 20 years and before joining Vodafone
served as British Ambassador to Finland.
Crispin Davis Sir Crispin Henry Lamert Davis has been appointed as an Non-Executive
Director of the Company effective July 28, 2014. He was the Chief
Executive of Reed Elsevier plc from 1999 to 2009. He was previously
Chief Executive of Aegis Group plc and the Group Managing Director of
Guinness Group plc (now Diageo plc). Sir Crispin began his executive
career with Procter & Gamble, where he held a variety of senior
management roles including as President of the Company's North
American Food Business. In his non-executive career, Sir Crispin was the
Chairman of StarBev Consumer Industries B.V. from 2009 to 2012 and
was a Non-Executive Director on the Board of GlaxoSmithKline plc from
2003 to 2013, where he chaired the Remuneration Committee. Currently
an advisor to CVC Capital Partners, Sir Crispin was knighted in 2004 for
services to publishing and information. He is an Oxford University
Trustee and Member of the University Board.
Vodafone strategic management analysis
Vodafone strategic management analysis
Vodafone strategic management analysis
Vodafone strategic management analysis
Vodafone strategic management analysis
Vodafone strategic management analysis
Vodafone strategic management analysis

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Vodafone strategic management analysis

  • 1. STRATEGIC MANAGEMENT PROJECT On VODAFONE SUBMITTED BY PRAGYA RATAN Prgyaratan1@gmail.com STRATEGIC MANAGEMENT PROJECT On VODAFONE SUBMITTED BY PRAGYA RATAN Prgyaratan1@gmail.com STRATEGIC MANAGEMENT PROJECT On VODAFONE SUBMITTED BY PRAGYA RATAN Prgyaratan1@gmail.com
  • 2. TABLE OF CONTENTS PART-1 Introduction to the Company & Industry Research Design & Methodology Company’s Vision & Mission PART-2 External analysis Industry/Competitor analysis SWOT/TOWS PART-3 Company analysis on the basis of key performance indicators Strategic options/alternatives Strategic & Financial Objectives Recommended Organizational & Business Strategies PART-4 Financial projections & overall evaluation of strategies Monitoring & control PART-5 Vodafone customer base
  • 3. PART-1 1.1 Introduction Of Indian Telecom Industry The Indian telecom sector has seen an exponential expansion in the past few years with tele density increasing from 10% in year 2004 to 74% in year 2012. India at present has close to 900 million mobile users with 8 million subscriber additions per month. It has been observed that tele density is lower in rural areas than in urban areas. Areas with low tele density might offer potential for future growth. There are approx 650,000 telecom towers, 60% of which are in rural areas. The telecom on rural India is a playing a significant role for visible participation of rural India in main stream socio-economic growth. The majority of India’s population is in rural areas almost two-third, however with tele-density of 13%. With saturation of urban markets, rural India poses a huge opportunity to telecom operators. Setting up a telecom infrastructure in rural areas has its own challenges. The big challenges for rural telecom network are to maintain network uptime due to regular power cuts, power problems and equipment maintenance. Instantaneous solution is running the base station sites with Diesel Generator backup power adds high cost to the operations. Another long term solutions of these might be using of alternative power like solar power, wind power. At the same time, telecom companies needs latest equipments that consume less power. The growth in mobile networks over the next few years will come from remote parts of the India, where access to electric grids isn't always guaranteed. The service providers are under tremendous pressure to deliver the solutions in efficient manner and make availability of networks. To overcome the electric power grid supply problems, the widely deployed solution is base stations equipped with diesel-powered generators. 1.2 Introduction to the Company Vodafone India Limited, formerly Vodafone Essar Limited, is the second largest mobile network operator in India after Airtel by subscriber base. It is based in Mumbai, Maharashtra. It has approximately 160 million customers as of December 2013. It offers both prepaid and postpaid GSM cellular phone coverage throughout India with good presence in the metros.
  • 4. Vodafone India provides 2.75G services based on 900 MHz and 1800 MHz digital GSM technology. Vodafone India launched 3Gservices in the country in the January–March quarter of 2011 and plans to spend up to $500 million within two years on its 3G networks. Vodafone added maximum subscribers in July 2014, with 13.6 lakh new users joining its network to take its base to 17.12 crore. Vodafone is the second largest player in telecom operator in India after Airtel, with a market share of 22.95%. Vodafone India Type Private Industry Telecommunications Predecessors Hutchison Essar Limited Headquarters Peninsula Corporate Park, Ganpatrao Kadam Marg,Lower Parel, Mumbai,Maharashtra, India Services Mobile telephony Wireless broadband Parent Vodafone Group Website www.vodafone.in History of Vodafone Max Touch, Orange and Hutch (1992-2007) Hutchison Max Telecom Ltd. (HMTL), a joint venture between Hutchison Whampoa and the Max Group, was established on 21 February 1992.The licence to operate in Mumbai (then
  • 5. Bombay) circle was awarded to Hutchison Max by the Department of Telecommunications(DoT) in November 1994. The cellular service branded "Max Touch" was launched the same year. Switching and other related equipment were provided by Ericsson and the network was designed, engineered and set up by Motorola. Hutchison Max entered into the Delhi telecom circle in December 1999, the Kolkata circle in July 2000 and the Gujarat circle in September 2000. Licences for these circles had initially been awarded by the DoT in 1994, 1997 and 1995 respectively. Between 1992 and 2006, Hutchison acquired interests in all 23 mobile telecom circles of India. Vodafone purchases Essar's stake In July 2011, Vodafone Group agreed terms for the buy-out of its partner Essar from its Indian mobile phone business. The UK firm paid $5.46 billion to its Indian counterpart to take Essar out of its 33% stake in the Indian subsidiary. It will leave Vodafone owning 74% of the Indian business, while the other 26% will be owned by Indian investors, in compliance with Indian law.On 11 February 2007, Vodafone agreed to acquire the controlling interest of 67% held by Li Ka Shing Holdings in Hutch-Essar for US$11.1 billion, pipping Reliance Communications, Hinduja Group, and Essar Group, which is the owner of the remaining 33%. The whole company was valued at USD 18.8 billion. The transaction closed on 8 May 2007. In April 2014, India based Piramal Group sold its 11% Stake in Vodafone India to Prime Metals, an indirect subsidiary of Vodafone Group.
  • 6. Vodafone India subscriber base statistics as on January, 2013. 1.2 Research Design & Methodology Research is one systematic activity that is undertaken by scholars, to help in widening our knowledge base in all fields of education. Research is undertaken in both social sciences as well as science subjects such as physics and biology. There are many different types of researches such as descriptive, exploratory, explanatory, and evaluation research. Exploratory research is challenging as it tackles vaguely defined hypothesis and tries to find answers to questions. This kind of research is social in nature and requires some preliminary work in the direction of the research. Exploratory research is treated as the purpose of the research saying this kind of research proves to be useful when the hypothesis has yet not been formed or developed. There are certain basic premises that need to be tested at the start of an 0 2000000 4000000 6000000 8000000 10000000 12000000 14000000 16000000 18000000 Gujrat UP Maharashtra WestBengal Tamilnadu Rajasthan AndhraPradesh Delhi Goa Karnataka Bihar Kolkata Punjab Haryana MP chennai odisha Assam jammu&kashmir Himachalpradesh Mumbai No.Of Subscribers No.Of Subscribers
  • 7. exploratory research. With the help of these hypotheses, the researcher hopes to arrive at more generalizations. Type of Data collection: 1) Secondary data collection through online sites, research papers, white papers, articles, journals, previous research on similar topics etc. 1.3 Company’s Vision & Mission Vision Vodafone can help to transform societies by bringing innovative products and services to our 404 million customers, 68% of whom live in emerging markets. Mobile technology is already a vital tool in people’s lives and our ambition is for Vodafone’s mobile services to further improve people’s livelihoods and quality of life. At the same time, we aim to help consumers, governments and businesses tackle some of the significant challenges they face – from food shortages and ageing populations, to lack of access to communications, healthcare and financial services. Our business focus on emerging markets, enterprise, data and new services gives us the ability to achieve our ambition to contribute to global development in this way, while continuing to grow our business at the same time, by developing commercially viable, scalable services that support sustainable development. Mission Statement We will enhance value for our stakeholders and contribute to society by providing customers with innovative, affordable and customer friendly communication services. Through excellence in our services we aspire to be the most respected and successful telecommunications company in India. We see our customers, employees, shareholders and the community we operate in as our most important stakeholders.  Customers We enhance value through delivering affordable, reliable and customized communication services which are simple to use, enjoyable, seamless and secure. Our customers respect us because:- • We understand their needs • We create innovative services
  • 8. • We consistently deliver on what we promise • We are transparent and trustworthy in our interactions • We provide a secure and reliable network • We offer affordable products and services We define success as delighted customers who recommend us to others.  Employees We enhance value through providing enriching careers and long term growth opportunities in a fair and collaborative work environment. Our employees respect us because • We provide a healthy and safe work place • We encourage mutual respect, trust and appreciation • We promote diversity and treat them inclusively • We conduct ourselves with transparency and integrity • We pursue speed and simplicity in all that we do • We recognise and admire accomplishments We define success as happy employees with great careers.  Shareholders We enhance value through growing the company’s revenue and profitability while creating sustainable free cash flow through efficient resource utilisation and effective risk management. Our shareholders respect us because • We follow ethical business practices • We communicate in a fair and transparent way • We enhance company’s reputation and brand value • We do everything to protect our shareholders interest We define success as creating sustainable value by delivering great shareholder return.
  • 9.  Our Community(Business partners, Authorities, Influencers and Local Communities) We contribute to the society by supporting authorities in mobilizing social change and achieving their economic goals, creating value for our business partners and contributing to the social & economic development of local Communities. Our community respects us because • We act responsible towards our environment • We create community connect • We stimulate business and economic growth • We have high standards of corporate governance • We conduct our business with transparency integrity and fairness We define success as being the most respected telecom company in India
  • 10. PART-2 2.1The external environmental analysis The external environments significantly have an impact on the company‟s strategic management model. According to Pearce and Robinson (2009), the external environment “can be divided into three interrelated subcategories: factors in the remote environment, factors in the industry environment, and factors in the operating environment”. These factors Vodafone Group is facing are discussed in this part. Remote environment  Economic Factors Most companies have recently been confronted with slower growth than ever in the volatile and rapidly changing global markets. Vodafone Group is not the exception and it hasn‟t been sustainably growing in some markets. International Monetary Fund (2010) reported that European market growth is projected only at 1.0% and 1.3% in 2010 and 2011 respectively but Vodafone Group has heavily relied on slower growth and saturated European market due to extremely higher mobile subscriber penetration with more than 150% in some countries. Its revenues from the market captured 67.3% of its total revenues in 2009 but ARPU (average revenue per user) in UK, Greece, Netherlands, Spain, Italy, Germany, and Portugal where the company is operating has been slightly decreasing. In contrast, IMF (2010) reported that Indian market growth is projected at 9.4% and 8.4% in 2010 and 2011 respectively. Vodafone Group has improved performance in emerging markets in 2009 and executing in emerging markets is one of the four main objectives. Service revenues in the market grew by 14.7% in 2009, and Indian mobile market, the second-largest market around the world after China, has been perceived as its key market.  Political factors Political factors are also a major consideration for Vodafone Group on formulating and implementing its strategies in accordance with each country specific legal, regulatory and tax environments. The company also has to comply with an extensive range of requirements that regulate and supervise the licensing and the allocation of frequency spectrum. Vodafone (2010a) stated “decision by regulators regarding the granting, amendment or renewal of licenses, to us or to third parties, could adversely affect our future operations” (p. 38). For instance, EU recently introduced a multi-year spectrum policy program. India made regulations for the implementation of mobile number portability in 2009.  Technological Factors Telecommunication operator‟s ability to adapt the advanced technologies has a great impact on innovative and differentiated products and services in response to the rapidly changing customer needs and market environments. Saxtoft (2008) argued that “competitive advantages in the future convergent communications industry will be based on the organizational ability of communications service providers to utilize the specific mix of network data, services data and customer data available to each of the players in the market” (p.71). With its ability to continuously adapt new ICT, the company has created value-added services like Vodafone 360 and Cloud Computing services.
  • 11. Industry environment Most telecommunications operators in developed markets have been confronted with a fierce competition and declining revenues, and understating of competitive forces is greatly crucial to thrive and survive. Michael Porter‟s five competitive forces are discussed in this section. Vodafone Group hasn‟t experienced in the extremely steep declines in revenues while operating in both developed and emerging markets and thus diversifying risks.  Threat of Entry Telecommunications industry is very capital-intensive business with a huge amount of capital to acquire and maintain its network infrastructure and technologies, and create new products and services. Although the huge capital requirements traditionally represents a more significant entry barrier to new entrants than some other industries, recent MVNO (mobile virtual network operators) business model lowers the barrier and small companies with differentiated products and services has been identified as new entrants. In addition, while telecommunications operators have made significant efforts to redefine their value chains to create new value-added services, Google, Amazon and other online companies have attempted to redefine industry boundaries. These companies are perceived as new competitors in telecommunications industry.  Supplier Power Vodafone Group‟s key suppliers are handset manufacturers like Samsung, Nokia and Motorola, and network equipment manufacturers like Ericsson, Alcatel-Lucent, and Nokia Siemens Networks. Those suppliers‟ bargaining powers have weakened due to lack of technical advantages and new Chinese entrants that extremely pursue cost leadership. In contrast, Vodafone Group has enhanced its bargaining power to key suppliers while focusing on „One Vodafone‟ program to integrate business activities to leverage economies of scale and scope.  Buyer Power While Vodafone Group has been confronted with a fierce competition globally, its customers tend to be more price-sensitive in both developed and emerging markets. The company has still relied on European markets with significantly higher mobile subscriber penetration, and ARPU in all Vodafone operating countries in the markets have been decreasing. In Indian mobile market as its key market, ARPU continued to decline despite subscription growth.  Threat of Substitutes Vodafone Group has continuously diversified its product and service portfolio including traditional mobile voice and messaging, data, fixed line solution and other services such as value-added services to meet its customers‟ total communications needs. Its mobile voice and messaging services, data, fixed line solutions, and other services accounted for 67%, 11%, 10%, 8% and 4% of total revenues respectively in 2009, and therefore substitutes for its mobile voice and messaging services have a significant impact on its business. Although mobile voice services have overtaken traditional fixed voice services, especially in emerging markets, VoIP (Voice over IP) services are identified as its substitutes in addition to fixed voice services globally. Myers expected (2010) that VoIP product revenue will climb to $578 million in 2Q2011, a 2.4% increase over 2Q2010. While there are still concerns on the reliability and quality over IP
  • 12. networks, more broadband customers become aware of the benefits of VoIP to “enjoy the flexibility and cost-savings by using their existing broadband connection for voice services (Myers, 2010, p. 37). Vodafone Group hasn‟t still ultimately embraced VoIP services but growth of VoIP services has a significant impact on a decrease in its voice ARPU. Vodafone Group has focused not on cost leadership to directly compete with VoIP services but on diversifying its product and service portfolio and launching new value-added services. Its data services are mainly used to connect the Internet and its substitutes are broadband services and fixed Internet services. Vodafone has embarked on fixed broadband service especially in developed markets to offer fixed-mobile converged services to differentiate its services from other fixed or mobile operators. In developing markets, fixed broadband services and Internet services are not identified as substitutes for mobile Internet services any more since mobile Internet services have overtaken fixed broadband services. Its fixed broadband services are identified as complementary services to deliver fixed-mobile converged services. The company has generally started with mobile services and then added fixed services in all market the company has entered into. According to Marvrakis and Saddi (2009), “the previously pure mobile operator is now following a total communications strategy which includes mobile (cellular), broadband (fixed) and wireless; it has been offering combined services, with fixed, mobile and broadband services under a single bill”.  Rivalry Vodafone Group is operating its business in more than 70 countries and the general competitive landscape differs in developed and emerging markets. However, the switching cost is low in both markets and the differentiation strategy is essential for the company to keep its customers from rivals. European market, the largest markets for Vodafone Group, has been saturated due to extremely higher mobile subscriber penetration. Value-added services are identified as key differentiators and the company has launched Vodafone 360, and Cloud computing services in the market. In contrast, Indian is one of the highest growth mobile markets globally and the company accounted for approximately 30% of its total number of subscribers globally. While the mobile subscriber penetration in Indian markets hasn‟t reached 50%, Vodafone Group and other mobile communications companies are facing extremely fierce price competition due to lack of differentiated services. Operating environment  Competitive Position The company‟s geographic footprint in more than 70 countries affords its huge economies of scale and scope and ensures that Vodafone Group has diversified revenue base to cope with recent economical recession “as its emerging market operations helped cushion the poor performance in Europe and Turkey”. The Vodafone brand is perceived as one of the most recognizable global telecommunications brands and the company has capitalized on the brand recognition to enter into new markets. The company is also a market leader in developing products and services. It hasn‟t implemented cost leadership but differentiation strategy while leveraging its strong brand recognition and diversified geographic footprint. However, the company has faced fiercer competition across most of global markets than ever. Its major multi- national competitors are France Telecom‟s Orange, Deutsche Telekom‟s T-Mobile, and Telefonica‟s O2. The company also has to compete with domestic mobile operators like TMN in
  • 13. Portugal and KPN in Netherlands in European market. Its performance in European market is worse than its rivals especially in Germany, Italy and Spain. The company is also facing fierce price competition in Indian market. It presently comes third behind Bharti Airtel and Reliance.  Customer Profiles While diversifying its markets and product and service portfolio, it has expended its customer base globally and served its products and services to both consumers and enterprises. Traditional voice and messing services have been already commoditized globally and they are affordable enough for most people living in the countries where Vodafone Groups is operating.  Human Resources Vodafone Group employs around 85,000 people and its employees are identified as a source of competitive advantages to improve existing customer relationships locally. Vodafone Group (2010a) stated that “we rely on our people to maintain and build on our success and to deliver excellent service to our customers”, and “we aim to attract, develop and retain the best people and to realize their full potential” (p .22). The Vodafone Way program can help all employees align with a common set of values and behaviors in order to be an admired, innovation and customer-focused company operating with speed, simplicity and trust. Employee turnover rate has been stable at 13%, 13%, and 15.2% in 2010, 2009 and 2008 respectively. 2.2 Industry/Competitor analysis  Positioning Strategy:- Vodafone  Vodafone has veered towards warmth and emotions.  Vodafone used the powerful visual imagery of a dog. Airtel  Airtel is focused on functionally and efficiency.  Airtel choose to use music, which is not nearly as effective.  Target Audience:- Vodafone  They are targeting middle class person as their target audience.  It can be justified by their product like chota recharge.
  • 14. Airtel  A group or class of persons enjoying superior intellectual or social or economic status  Up market professionals 2.3 Segment Target Positioning (STP) & SWOT Analysis STP Analysis Segment Upper class and above; Lifestyle Target Group Corporates; student campus plans Positioning Inviting, cheerful and humorous SWOT Analysis Strength 1.One of the most popular cellular service provider in India 2.One of the largest Telecom operator in the world 3.Only Indian operator, with VSNL, that has an international submarine cable 4.High brand visibility 5.Strong advertising with ZooZoo concept 6.Tieup with international sports like FormulaOne Weakness 1.Price competition from BSNL and MTNL 2.Untapped Rural Market Opportunity 1.Fast expanding cellular market 2.Latest and low cost technology 3.Untapped rural market Threats 1.New entrant's low price offering 2. Saturation point in Basic telephony service 3.Mobile Number Portability Competition Competitors 1.Airtel 2.Idea 3.Reliance 4.Tata Docomo 5.Aircel 6.MTNL 7.BSNL 8.Uninor 9.Tata Indicom 10.Virgin
  • 15. PART-3 3.1 Company analysis on the basis of key performance indicators Key Performance Indicators (KPIs) are a set of metrics that regularly assess the health of each business activity against the strategic and operational objectives. KPIs represent “a set of measures focusing on those aspects of organizational performance that are the most critical for the current and future success of the organization”. The actual KPI values are compared to the target KPI values in the balanced scorecard on a regular basis while KPIs have changed in response to the business environment changes. The better the actual KPIs are compared to the target KPIs, the higher the scores in most cases. KPIs provide an objective feedback and facilitate the objective setting for future performance. KPIs can be divided into the strategic, tactical, and operational levels. Strategic KPIs can be directly translated into tactical KPIs and subsequently into operational KPIs, and they are logically tied with each other through a set of cascading dashboards. “Dashboards can be configured and personalized to provide strategic, operational and tactical views of the organization, processes, services, and activities” in line with each decision making level. According to Rasmussen, Bansal and Chen (2009), there are ten steps to use plan a KPI design project:  Build the team.  Clarify and agree to the organization‟s strategies and tactics.  Decide on dashboard categories and prioritize.  Choose organizational deployment.  Create a list of KPIs and metrics for each strategic objective.  Test KPIs against framework.  Select top KPIs.  Choose presentation method and interactivity for each KPI.  Document decisions and get sign-off.  Design architecture and dashboards based on document. Balanced Scorecard methodology in Vodafone Group Vodafone Group has already implemented the balanced scorecard methodology that is not only focuses on the financial perspective but also customer, business process, and learning and growth perspectives. The approach has helped Vodafone Group create additional values. According to EFM Software (2009), there are several reasons why Vodafone Group decided to use the balanced scorecard and eventually developed eighty and even up to one hundred indicators:  There was a need for operational performance measurement and feedback.
  • 16.  The increasing complexity of systems and organization as a consequence of its rapid growth led to decreasing coherence between different management reports.  The business dynamics cause continuously changing external factors which in turn influence the decision making. In the interview conducted by Pointon (2005), the former CEO at Vodafone Australia, Grahame Maher mentioned the values of the balanced scorecard: As for the BSC the beauty of that theory is that everything in the business should be measured and not just the accepted financial measures. The BSC has a natural flow which says the flow is PEOPLE then PROCESS then CUSTOMER and then finally FINANCIAL measures as they are just outcomes of the other stuffs. This is completely consistent with the Values based approach which puts people as the most important focus. In another the interview conducted by Supply Chain Standard (2006), the head of services at Vodafone Global Supply Chain explained the values of the balanced scorecard as “in terms of building the community to maximize performance, we are well down the track on structuring an integrated SCM organization and are to implement a balanced scorecard reflecting not just savings but the total value add to Vodafone of the SCM function”. In addition to internal performance management objective, Vodafone Group has externally reported some of its KPIs in its interim management statement on a regular basis. Actual and target values of EBITDA margins, service revenue growth, free cash flow, net debt, adjusted operating profit, and data traffic growth are included in the statement. Those four strategies are now decomposed into strategic objectives, and performance measures are developed for each of the strategic objectives, as shown in Figure. In the annual report for the year ended 31 March 2010, Vodafone reported the a number of KPIs used by The Board and the Executive Committee “to monitor Group and regional performance against budgets and forecasts as well as to measure progress against our strategic objectives” (Vodafone, 2010a, p. 24). Those KPIs are categorized as „VF defined‟ in Figure. To completely align with each of strategic objectives, a total of five KPIs are relatively proposed, and categorized a Proposed‟ in Figure .
  • 17. KPI for Vodafone Group  Customer Perspective The customer delight index, churn rate, and revenues from emerging markets, and the number of proportionate mobile subscribers are developed in line with each of strategic objectives in the customer perspective. Mobile technologies have evolved and its customers use their mobile phones not only to call but also access the internet, watch television, play music and take pictures. Vodafone Groups has focused on customer value enhancement to maintain their loyalty and trust. According to Vodafone (2010b), the Customer Delight Index measures the levels of satisfaction and dissatisfaction: Our Customer Delight Index (CDI) measures levels of satisfaction and dissatisfaction among consumer and business customers. It helps us to monitor our progress against our goal to ‘delight our customers’. The CDI results are reviewed quarterly at board level to identify priorities for improvement. In addition, a Customer Experience Committee meets monthly to review issues affecting customer satisfaction and put action plans in place.  Financial Perspective EBITDA margin, free cash flow, and return on common equity („ROE‟) are developed in accordance with each of strategic objectives in the financial perspective. A robust network infrastructure is a source of competitive advantages for Vodafone Group but it generally reports
  • 18. large losses due to hugely spending capital expenditure to construct the infrastructure. EBITDA margin enables to analyze the profitability of core business operations while deducting the huge amount of interest, taxes, and capital expenditures. Free cash flow generation is a critical source of Vodafone Group‟s growth while establishing its entities through the acquisition, joint-venture, and strategic alliance globally. In addition, free cash flow can support higher dividends and in turn contribute to maximizing shareholder‟s values. ROE is the most important bottom line accounting ratio that represents the actual return earned by shareholders and is the best measure to directly assess its actual performance against the strategic objectives „drive shareholder return‟.  Learning and Growth Perspective ARPU, data revenue, fixed revenue, and the number of enterprise mobile voice connections are developed in accordance with each of strategic objectives in the learning and growth perspective. Most of those measures are typically categorized into the financial perspective. However, not tactical and operations KPIs but strategic KPIs are analyzed in this research and therefore those measures are considered as a reflection of Vodafone Group‟s innovation in this research. Vodafone Group hasn‟t implemented the cost leadership strategy to gain a competitive advantages but it relatively focuses on creating and launching new value-added services to increase ARPU. ARPU can be therefore considered as one of the key measures of its innovation. While traditional voice and messaging services has captured more than 75% of its service revenues, data service is targeted as one of three key areas for growth, and therefore the data revenue is a key measure to directly evaluate its growth objective. Vodafone Group has expanded fixed broadband customer base to be a total communications provider. It has only fixed broadband services in its fixed service portfolio, and the broadband is also perceived as one of three key areas for growth. Fixed revenue represents the growth objective and is considered as a key measure. The last one of three key areas for growth is the enterprise services. While the enterprise service revenues are not independently reported in the annual report, the main enterprise service is an enterprise voice service and therefore the number of enterprise mobile voice connections can be considered as a key measure of its growth objective.  Business Processes Perspective The employee turnover rate, annual capital expenditure, and operational efficiency ratio are developed in accordance with each of strategic objectives in the business process perspective. Vodafone stated that “We rely on our people to maintain and build on our success and to deliver excellent service to our customers”, and “we aim to attract, develop and retain the best people and to realize their full potential” (Vodafone, 2010a, p .22). The employee turnover rate is one of
  • 19. the key measures to evaluate its performance against the strategic objective „maintain high performance benchmark for employee engagement‟. As a part of cost efficiency programs, the two-year working capital reduction program is executed and the working capital itself is the best measure to directly evaluate the actual performance against the targeted working capital. While the £1 billion cost reduction program has already been delivered, Vodafone has extended this program to a further £1 billion cost saving by 2013. £1 billion includes both the capital and operating expenditures and it might be difficult to focus on either capital or operating expenditure. However, the objective of the cost reduction program is to improve its operational efficiency and, the number of subscribers versus the number of own employees‟ ratio can alternatively used. 3.2 Marketing strategy of Vodafone  Vodafone’s strategy is customer focused and product led; the company is continually developing new products and services which utilize the latest technological advances.  To keep its leading edge, Vodafone is continually looking to add value to the services it provides and to the packages it offers to customers.  ZooZoo , the new brand ambassador of Vodafone, has created a furors in the advertising industry.  Vodafone has given birth to the Zoozoo: a special character created specifically to convey a value added service (VAS) offering in each of the newly released commercials.  Vodafone has come with creative advertising campaign for its various plans.  This strategy has captured the imagination of millions. The strategy is a buzz that lives up to the brand image of great creative's and clever marketing.  In the first 10 days of IPL (Indian premier league) it has reached a cumulative of 89 million people. This is a wonderful strategy adopted by Vodafone.This has helped the company to raise not only its profits through sales but has also tremendously increased its brand value. Zoozoos have become so popular that Vodafone has succeeded in its effort of viral or buzz marketing. Their add campaign has gained so much popularity all over the world.
  • 20.
  • 21. 3.3 Business strategy of Vodafone 3.4 Strategic & Financial Objectives The primary objective of Vodafone as a business entity is profit maximisation. The company has a mission statement that ensures for this objective to be achieved in the best possible manner. Vodafone’s mission statement is “to be the communications leader in an increasingly connected world” (Annual Report, 2010). Accordingly, this mission statement is communicated to all stakeholders of the company, especially to 84,990 employees (Company Description, 2010) of the company, due to the fact that it is employees who are going to contribute the most to the achievement of the mission statement. Vodafone is committed to achieving its aims and objectives through offering innovative and superior services. According to Saplista (2008), Vodafone is not limited to offering basic telecommunications services such as mobile phone calls and text messaging, but also offers such advanced services as:
  • 22.  Vodafone at Home and Vodafone Office represent integrated mobile and communication services to satisfy household, as well as business needs.  Vodafone Passport allows customers to ‘take their home tariffs abroad’ through roaming services which is possible due to the wide global presence of the company.  Vodafone Live! is integrated communication and multimedia solution offered by the company to be used through mobile phones and notebook computers.  Vodafone 3G offers 3G services that allow customers to transfer and download data in various formats.  Vodafone Mobile Connect data cards and Mobile Applications offer customers the possibility of portable internet. 3.5 Strategic Model for Vodafone The level of competition in each industry, especially in telecommunications industry Vodafone is operating in has become very fierce. The only way to survive and expand in such a competitive environment for Vodafone is to have an efficient strategy that would be the source of competitive edge for the company. Currently Vodafone has no clear strategy. Therefore potential customers are not sure in what ways the company can offer value to them. According to Porter’s generic strategies companies can choose cost leadership and differentiation strategy in narrow and broad scope (Porter, 1985). Vodafone is highly recommended to implement differentiation strategy in a industry-wide scope. Thus, Vodafone should develop products and services with additional features that present value for potential and existing customers, and the company can charge additional extra prices for this additional feature. For instance, in its portable and home broadband services Vodafone can further invest in research and development and achieve increasing the speed of the internet browsing they are offering. This particular strategy is most likely to prove efficient due to the fact that although currently there are many internet providers in UK the speed of internet browsing tends to decrease during specific hours of the day.
  • 23. Another justification for the suitability of differentiation strategy for Vodafone relates to the fact that due to the current size and financial resources of the company Vodafone can commit to high level of research and development expenses this strategy initially requires. Although Vodafone’s competitors do understand the advantages of differentiation strategy, unlike Vodafone the state of their financial resources do not allow them to adopt differentiation strategy. Information system can be used at each above specified decision-making level in order to give competitive edge to Vodafone manager at that level in particular and to the company itself in general. Curtis and Cobham (2008) define information system as an integrated combination of information technology components and related human efforts that is used to assist in operations and decision making. Information system at each decision-making level at Vodafone should be devised and maintained in a way that it can serve the two following purposes:Firstly, information systems should support the key business functions, and create competitive edge for Vodafone.Secondly, information system should assist in efficient facilitation of Vodafone’s customer relationship management. In order to achieve these objectives the following recommendations should be implemented.  Strategic level management. Information system at strategic level for Vodafone should include all external and internal factors that are going to affect the company. Information of such a nature should be supplied to strategic level managers systematically in order to assist them in decision-making. Moreover, information system intended for Vodafone strategic level management should contain detailed information about potential overseas markets, information regarding the extend of competitor activity as well as information regarding the suitability of Vodafone products and services to today’s competitive standards. Inefficient information system at strategic level management is going to have dramatic negative consequences caused by not being able to respond to changing market conditions, because there was no accurate information about the changing market conditions in the first place.  Tactical level management. Information system for Vodafone managers at tactical level should include breakdown of sales by a region, as well as breakdown of sales by a product or a service. It is important for such type of information to be supplied to tactical level managers on a regular basis. Moreover, information technology should be widely used in order to collect such type of information, because it will make the process faster, as well as cost efficient. Not implementing and maintaining efficient information system for tactical level management will cause huge losses for Vodafone which is going to affect the whole region and damage the image of the company dramatically.
  • 24.  Operational level management. The scope and range of information system in operational level management is considerably smaller compared to strategic and tactical levels. Nevertheless, it is equally important for operational level management at Vodafone to have a constant supply of information relating to the process of products and services, stock availability, customer credit ratings etc.Again information technology must be widely used in order to process and store information system at operational level management. The negligence of this recommendation may result in loss of revenues caused by the absence of stock in stores, improper pricing and many other ways.Currently Vodafone commands a leading position in the global telecommunications market. However, due to the constantly changing marketplace the company cannot afford to take this position for granted and has to engage in increasing its competitive advantages in many fronts. 3.6Recommended Organizational & Business Strategies  Building a learning organization and a professional intellect Vodafone Group has embraced diverse workforce and offers equal opportunities for all aspects of employment and advancement, regardless of race, nationality, sex, age, marital status, disability, religious or political belief, to understand expectations of its diverse customers around the globe and have required skills and competences to create and launch the innovative and differentiated products and services that Vodafone Group meets its customers‟ requirements. Vodafone Group created a leaner and agile structure with clear accountabilities in 2009 to accommodate rapid growth. Three regions, including Europe, Africa and Central Europe, and Asia Pacific and Middle East, were created and each regional CEO was appointed. Along with the group-wide organizational restructuring efforts, several centralization initiatives have been accelerated, including supply chain, product development, IT and network programs, and terminal procurement. As the result, approximately 1,900 jobs were eliminated but the overall number of employees grew 9% because of rapid growth in emerging markets and business acquisitions. Although organizational structure has been continuously improved in response to market environmental changes, Vodafone Group has been committed to helping all employees reach their full potential through ongoing training and development. “In the 2009 financial year, Vodafone provided an aggregate of 230,000 days of training, an average of three days per employee”, and “this training program was extended to all employees via an online interactive course that has been translated into 11 languages and rolled out to 18 countries”.
  • 25.  Taking advantage of Customer Relationship Management tools Vodafone Group has developed the group-wide strategy that is associated with its better understanding of the importance of the customer experience to its business success. Delivering value-added products and services that can meet individual customer needs and widen the scope of its relationship with its customers are essential to reshape its competitive environment. Vodafone Group has standardized on Siebel CRM platforms across three geographies to collect, analyze and share customer information across multi-channels, including customer service agents, sales and marketing teams, to gain a 360 degree view of customers, and measure and manage customer satisfaction, customer loyalty, revenue assurance, revenue growth and profitability. Employees in Vodafone Group have access to a centralized repository for customer information in the systems.  Top Line Improvements Vodafone Group has definitely had better understanding of the strategic values of IT to gain and maintain competitive advantages from the viewpoint of both top line and bottom line improvements. To improve top line, general telecommunication operators consider IT as sources of innovative and differentiated products and services that they create and launch globally in a timely manner. Vodafone Group has not used the cheaper price than other competitors to attract new customers and retain existing customers to become the largest or the second largest mobile operator in the most markets the Group has ever entered but it has focused on creating and launching new value-added services that entice new customers. Arun Sarin, the former CEO of Vodafone Group stated. We have rededicated ourselves to delighting our customers because we believe this is the foundation for our continued success. We recognize that every customer interaction provides another opportunity to win loyalty and that‟s why we continue to raise standards on the quality of customer case in our call centers and our stores and the quality of our networks. Key to delighting our customers is our ability to deliver superior voice and data services according to differing customer needs. The choice of right IT at right time is necessary to drive current and future returns and intellectual capital that articulate and structure all the stakeholders‟ values, and Vodafone Group‟ s three key strategic IT initiatives have been sources of competitive advantages to improve top line.  Agility to adapt the advanced technologies Telecommunication operators‟ agility to adapt the advanced technologies has a great impact on innovative and differentiated products and services, including the converged services of network data, services data and customer data available to improve customer experience in response to the changing customer needs and market environment. Saxtoft (2008) argued that “competitive advantages in the future convergent communications industry will be based on the organizational ability of communications service providers to utilize the specific mix of network data, services data and customer data available to each of the players in the market”. Vodafone‟s ability to
  • 26. adapt new IT continuously ensures that their customers are able to “stay connected to the people and the information that are central to their lives – via voice, text, instant messaging, e-mail, music, communities, news, and applications both social and work related – whenever, wherever” .Vodafone Group thus created Vodafone 360, Vodafone Vorteil, and Cloud Computing services and the Group in turn can greatly improve customer experience, and eventually gain and maintain its competitive advantages. Along with increasing bandwidth demands and a data dominated traffic mix, the ability to optimize its network capacity according to the differentiated products and services has been essential in improving quality of services for these services. Vodafone launched „Vodafone 360‟, a suite of new Internet services for the mobile and PC that gather all of customer‟s friends, communities, entertainment and personal favorites. Vodafone 360 encompass a universal contacts address book „Vodafone People‟ that automatically synchronize all contacts from a customer phone, Facebook, Windows Live Messenger, and Google Talk, and an online content and data management tool. Vodafone 360 brought together many existing Vodafone mobile Internet initiatives under a common and intuitive service umbrella. Vodafone 360 represents the new service standard to take everything back in Vodafone and superimpose proprietary ownership over all service aspects while dispelling the notion that mobile operators are unable to response to the full force of the innovation that Apple iPhone brought to market. This is the first time a mobile operator has created an experience which can compete against the iPhone standard of excellence and superior user interface. Vodafone is now attempting to move into the fixed voice and broadband markets and has either acquired fixed Internet Service Providers in some countries or formed partnerships in the other countries where acquisitions are not feasible or not cost efficient. “The previously pure mobile operator is now following a total communications strategy which includes mobile (cellular), broadband (fixed) and wireless; it has been offering combined services, with fixed, mobile and broadband services under a single bill”. Cloud Computing has become popular in the telecommunications industry all over the world. It is “a large-scale distributed computing paradigm that is driven by economies of scale, in which a pool of abstracted, virtualized, dynamically-scalable, managed computing power, storage, platforms, and services are delivered on demand to external customers over the Internet”, and“ has become the hottest technology in IT” .Vodafone Group announced a strategic partnership with Decho Corporation to deliver a series of „Could Services‟ for both enterprise and consumer markets. The first service to emerge across the Vodafone Group footprint is the „Vodafone PC Backup‟ service that enables customers to save personal data from the PC to a remotely hosted site. They are able to view and share the data from their account through the web browser of their PC while reducing the need to transfer the data from one device to others. None of Vodafone‟s key Tier 1 competitors has launched free PC backup and online storage aggressively with consumer mobile broadband services and Vodafone Group is relatively staking leadership in consumer Cloud Service provision. Emma (2009) argued that “A Vodafone-branded PC backup service promises powerful value-added differentiation for the operator‟s mobile and
  • 27. fixed broadband portfolio across its key European markers by year-end”. Vodafone Group can continuously maintain its competitive advantages while launching a series of Cloud Services faster than other competitors, in addition to existing PC backup and online storage services.  Optimizing entire value chains and redefining industry Optimizing entire value chains beyond Vodafone Group and its traditional suppliers, and redefining industry are identified as sources of competitive advantages to create and launch innovative and differentiated products and services. The telecommunications industry is confronted with unprecedented challenges in breaking down traditional industry boundaries and redefining industry in response to changing market environment while the Internet companies such as Google, eBay and Yahoo have demonstrated business models that enable third parties to develop new services by combining existing services to increase the value of the traditional and original services. Service providers are no longer limited to the traditional voice and simple data services but are comprised of content, application, and other service providers. To compete against these new service providers, an effective service delivery framework is essential, to deliver and maintain differentiated services beyond traditional boundaries, achieve time to market, and conclude business agreements among all stakeholders.  Group Technology Vodafone Group‟s has driven the Group Technology initiatives that have managed and controlled group-wide projects to orchestrate the move toward significant coordination and identify and disseminate best practices to focus on expansion of service capacity while replicating business models across a number of countries and maintaining cost efficiency. Vodafone Group created two central functions, "Group Marketing (to drive revenue growth), and Group Technology and Business Integration (to drive cost and scale benefits”, and “thy purpose of Group Technology will be to lead the implementation of standardized architecture for business process, information technology and network systems” (Hitt, Ireland and Hoskisson, 2008,). The initiatives have supported the third generation (3G) network rollout, the enhancement and expansion of Vodafone Live service to Germany, Ireland, Italy, the Netherlands, Portugal, Spain, Sweden and then UK, and the development of Vodafone Group‟s business offering on a global basis. Vodafone Group has benefited from the effective and efficient Group Technology initiative. First, Vodafone Group is given more strategic option for marketing and sales of its products and services. Second, the time-to-market becomes shorter by consolidating its development resources and sharing the solutions. Finally, cost reduction arises from avoiding multiple development  Bottom Line Improvements On the other hands, Vodafone Group has capitalized on IT capabilities to implement its strategic initiative, „One Vodafone‟ program, which transforms 16 operating companies into a united operation to achieve streamlined cost effective and efficient group. Vodafone Group has
  • 28. embedded IT sharing, outsourcing, and centralization and consolidation strategies in order to achieve the objectives of the program. Radio access network are shared with the other mobile operator, Orange, IT application development and maintenance are outsourced to IT outsourcing vendors, IBM and EDS, and supply chain management function and European data centers are centralized and consolidated to Vodafone Group.  Using IT initiatives to transform the operator The „One Vodafone‟ program was focused on key initiatives to integrate business activities to leverage economies of scale and scope of Vodafone group to transform the Group into a streamlined, cost-effective and efficient organization while standardizing designs and processes, reducing duplication, centralizing and consolidating certain functions and sharing best practices across operating companies. . The program was targeted at achieving £2.5 billion of annual pre tax operating free cash flow improvements in Vodafone Group‟s controlled mobile business by the end of March 2008. Vodafone Group predominantly embedded IT sharing, outsourcing, and centralization and consolidation strategies to achieve the objectives of One Vodafone program that transform multiple operating companies around the globe in Vodafone Group into a streamlined, cost effective and efficient organization.  Centralized Supply Chain Management A supply chain is a series of activities in which materials move through from initial suppliers to the final customers. In Vodafone Group, handsets, network equipment, marketing and IT services account for the majority of Vodafone‟s operational expenditures. Centralized Group‟s Global Supply Chain Management (GSCM) team has been driving „One SCM‟ to leverage its scale to significantly reduce operational expenditures. One SCM delivers values through robust integration across all Vodafone‟s operating companies to centralize and manage most of the Group‟s relationships with their suppliers. A consistent supplier performance management process has been implemented across the Vodafone Group‟s mobile operations and key suppliers are evaluated in the six areas “covering aspects of financial stability, technological and commercial criteria, delivery and quality management requirements and corporate responsibility”.
  • 29. PART-4 4.1 Financial projections of Vodafone Income statement Profit & Loss statement Profit & Loss Year Ended 31 March 2014 2013 2012 2011 2010 £ millions Turnover 38346.0 38041.0 46417.0 45884.0 44472.0 Operating Profit -4191.0 -2777.0 6224.0 537.0 4738.0 Net Interest -1208.0 -1291.0 -1476.0 880.0 -796.0 Profit Before Tax -5270.0 -3483.0 9549.0 9498.0 8674.0 Profit After Tax 11312.0 -3959.0 7003.0 7870.0 8618.0 Total Dividend n/a n/a n/a n/a n/a Retained Profit / Loss n/a n/a n/a n/a n/a Key Figures Year Ended 31 March 2014 2013 2012 2011 2010 Earnings Per Share Basic (p) 42.10 -15.66 13.74 15.20 16.44 Earnings Per Share Diluted (p) 41.77 -15.66 13.65 15.11 16.36
  • 30. Earnings Per Share Adjusted (p) 17.54 20.12 14.91 16.75 16.11 Earnings Per Share Growth (%) -13 35 -11 4 -6 Total Dividend (p) 11.00 10.19 9.52 8.90 8.31 Operating Margin (%) -11 -7 13 8 11 ROCE (%) -7 -2 19 15 16 Dividend Cover 1.59 1.97 1.57 1.88 1.94 Dividend Yield 5.00 5.20 5.30 4.80 5.20 Price / Earnings Ratio 12.60 9.70 12.00 11.00 9.80 Dividend Per Share Growth (%) 8 7 7 7 7 Balance sheet of Vodafone
  • 31. Financial ratio analysis Vodafone Group‟s financial performances are analyzed by utilizing the liquidity, profitability and debt management ratios, compared to the industry norm cited from Hoover‟s, Strategic Analytics, and Ycharts. Liquidity ratio  Current ratio Current assets normally are comprised of cash, accounts receivable, inventories, and marketable securities. Current liabilities include accounts payable, short-term notes payable, current portion of long-term debt, accrued taxes, wage, and other accrued expenses. The current ratio indicates “the extent to which current liabilities are covered by those assets expected to be converted to cash in the near future”. The current ratio is calculated by dividing current assets by current liabilities. A current ratio of one means that book value of current assets is exactly the same as book value of current liabilities. In general, investors look for a company with a current ratio of 2:1, meaning current assets twice as large as current liabilities. A current ratio less than one indicates the company might have problems meeting short-term financial obligations. If the ratio is too high, the company may not be efficiently using its current assets or short term financing facilities. Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010 Current assets 24,722.00m 21,649.00m 20,025.00m 17,003.00m 14,219.00m Current liabilities 25,039.00m 28,369.00m 24,025.00m 27,075.00m 28,616.00m Current Ratio 0.98 0.76 0.83 0.62 0.49 Graph of Current Assets & Current Liabilities 14,219.00 17,003.00 28,616.00 27,075.00 0.00 5,000.00 10,000.00 15,000.00 20,000.00 25,000.00 30,000.00 35,000.00 31/3/2010 31/3/2011 Financial ratio analysis Vodafone Group‟s financial performances are analyzed by utilizing the liquidity, profitability and debt management ratios, compared to the industry norm cited from Hoover‟s, Strategic Analytics, and Ycharts. Liquidity ratio  Current ratio Current assets normally are comprised of cash, accounts receivable, inventories, and marketable securities. Current liabilities include accounts payable, short-term notes payable, current portion of long-term debt, accrued taxes, wage, and other accrued expenses. The current ratio indicates “the extent to which current liabilities are covered by those assets expected to be converted to cash in the near future”. The current ratio is calculated by dividing current assets by current liabilities. A current ratio of one means that book value of current assets is exactly the same as book value of current liabilities. In general, investors look for a company with a current ratio of 2:1, meaning current assets twice as large as current liabilities. A current ratio less than one indicates the company might have problems meeting short-term financial obligations. If the ratio is too high, the company may not be efficiently using its current assets or short term financing facilities. Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010 Current assets 24,722.00m 21,649.00m 20,025.00m 17,003.00m 14,219.00m Current liabilities 25,039.00m 28,369.00m 24,025.00m 27,075.00m 28,616.00m Current Ratio 0.98 0.76 0.83 0.62 0.49 Graph of Current Assets & Current Liabilities 17,003.00 20,025.00 21,649.00 24,722.00 27,075.00 24,025.00 28,369.00 25,039.00 31/3/2011 31/3/2012 31/3/2013 31/3/2014 current assets current liabilites Linear (current assets) Linear (current liabilites) Financial ratio analysis Vodafone Group‟s financial performances are analyzed by utilizing the liquidity, profitability and debt management ratios, compared to the industry norm cited from Hoover‟s, Strategic Analytics, and Ycharts. Liquidity ratio  Current ratio Current assets normally are comprised of cash, accounts receivable, inventories, and marketable securities. Current liabilities include accounts payable, short-term notes payable, current portion of long-term debt, accrued taxes, wage, and other accrued expenses. The current ratio indicates “the extent to which current liabilities are covered by those assets expected to be converted to cash in the near future”. The current ratio is calculated by dividing current assets by current liabilities. A current ratio of one means that book value of current assets is exactly the same as book value of current liabilities. In general, investors look for a company with a current ratio of 2:1, meaning current assets twice as large as current liabilities. A current ratio less than one indicates the company might have problems meeting short-term financial obligations. If the ratio is too high, the company may not be efficiently using its current assets or short term financing facilities. Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010 Current assets 24,722.00m 21,649.00m 20,025.00m 17,003.00m 14,219.00m Current liabilities 25,039.00m 28,369.00m 24,025.00m 27,075.00m 28,616.00m Current Ratio 0.98 0.76 0.83 0.62 0.49 Graph of Current Assets & Current Liabilities 24,722.00 current assets current liabilites Linear (current assets) Linear (current liabilites)
  • 32. Profitability ratio  EBITDA margin ratio EBITDA, Earnings before Interest, Taxes, Depreciation and Amortization, to sales ratio is a measure of cash flows from the entity‟s operations. A robust network infrastructure is a source of competitive advantages for mobile communications companies but they generally report large losses due to hugely spending capital expenditures to construct the network infrastructure. EBITDA enables the companies to discuss their profitability of core business operations while deducting the huge amount of interest, taxes, and capital expenses. EBITDA margin ratios are stable but relatively lower than the industry norm due to the impact of business acquisitions and disposals, and foreign exchange associated with its global expansion. Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010 Revenue 38,346.00m 38,041.00m 46,417.00m 45,884.00m 44,472.00m EBITDA 12,831.00m 13,566.00m 14,606.00m 14,670.00m 14,735.00m EBITDA Margin 33.4% 35.6% 31.4% 31.9% 33.1% Graph of Revenue Return on Common Equity (ROE) ratio Return on equity (ROE) measures the rate of return on the money invested by common stock owners and retained by the company thanks to previous profitable years. It demonstrates a company's ability to generate profits from shareholders' equity (also known as net assets or assets Minusliabilities). 44472 45884 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 31/3/2010 31/3/2011 Profitability ratio  EBITDA margin ratio EBITDA, Earnings before Interest, Taxes, Depreciation and Amortization, to sales ratio is a measure of cash flows from the entity‟s operations. A robust network infrastructure is a source of competitive advantages for mobile communications companies but they generally report large losses due to hugely spending capital expenditures to construct the network infrastructure. EBITDA enables the companies to discuss their profitability of core business operations while deducting the huge amount of interest, taxes, and capital expenses. EBITDA margin ratios are stable but relatively lower than the industry norm due to the impact of business acquisitions and disposals, and foreign exchange associated with its global expansion. Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010 Revenue 38,346.00m 38,041.00m 46,417.00m 45,884.00m 44,472.00m EBITDA 12,831.00m 13,566.00m 14,606.00m 14,670.00m 14,735.00m EBITDA Margin 33.4% 35.6% 31.4% 31.9% 33.1% Graph of Revenue Return on Common Equity (ROE) ratio Return on equity (ROE) measures the rate of return on the money invested by common stock owners and retained by the company thanks to previous profitable years. It demonstrates a company's ability to generate profits from shareholders' equity (also known as net assets or assets Minusliabilities). 45884 46417 38041 38346 31/3/2011 31/3/2012 31/3/2013 31/3/2014 Revenue Revenue Linear (Revenue) Profitability ratio  EBITDA margin ratio EBITDA, Earnings before Interest, Taxes, Depreciation and Amortization, to sales ratio is a measure of cash flows from the entity‟s operations. A robust network infrastructure is a source of competitive advantages for mobile communications companies but they generally report large losses due to hugely spending capital expenditures to construct the network infrastructure. EBITDA enables the companies to discuss their profitability of core business operations while deducting the huge amount of interest, taxes, and capital expenses. EBITDA margin ratios are stable but relatively lower than the industry norm due to the impact of business acquisitions and disposals, and foreign exchange associated with its global expansion. Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010 Revenue 38,346.00m 38,041.00m 46,417.00m 45,884.00m 44,472.00m EBITDA 12,831.00m 13,566.00m 14,606.00m 14,670.00m 14,735.00m EBITDA Margin 33.4% 35.6% 31.4% 31.9% 33.1% Graph of Revenue Return on Common Equity (ROE) ratio Return on equity (ROE) measures the rate of return on the money invested by common stock owners and retained by the company thanks to previous profitable years. It demonstrates a company's ability to generate profits from shareholders' equity (also known as net assets or assets Minusliabilities). Revenue Linear (Revenue)
  • 33. ROE shows how well a company uses investment funds to generate growth. Return on equity is useful for comparing the profitability of companies within a sector or industry. Investors generally are interested in company's that have high, increasing returns on equity. Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010 Revenue 38,346.00m 38,041.00m 46,417.00m 45,884.00m 44,472.00m Net income 11.15B 4.20B 6.96B 7.97B 8.65B Total Assets 121,840.00m 138,324.00m 139,576.00m 151,220.00m 156,985.0m Total Equity 71,781.00m 72,488.00m 78,202.00m 87,561.00m 90,810.00m ROE 76.38% 0.53% 8.82% 8.74% 10.02% Graph of Net Income 8.65 7.97 0 2 4 6 8 10 12 31/3/2010 31/3/2011 ROE shows how well a company uses investment funds to generate growth. Return on equity is useful for comparing the profitability of companies within a sector or industry. Investors generally are interested in company's that have high, increasing returns on equity. Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010 Revenue 38,346.00m 38,041.00m 46,417.00m 45,884.00m 44,472.00m Net income 11.15B 4.20B 6.96B 7.97B 8.65B Total Assets 121,840.00m 138,324.00m 139,576.00m 151,220.00m 156,985.0m Total Equity 71,781.00m 72,488.00m 78,202.00m 87,561.00m 90,810.00m ROE 76.38% 0.53% 8.82% 8.74% 10.02% Graph of Net Income 7.97 6.96 4.2 11.15 31/3/2011 31/3/2012 31/3/2013 31/3/2014 Net income ROE shows how well a company uses investment funds to generate growth. Return on equity is useful for comparing the profitability of companies within a sector or industry. Investors generally are interested in company's that have high, increasing returns on equity. Account 31 March 2014 31 March 2013 31 March 2012 31 March 2011 31 March 2010 Revenue 38,346.00m 38,041.00m 46,417.00m 45,884.00m 44,472.00m Net income 11.15B 4.20B 6.96B 7.97B 8.65B Total Assets 121,840.00m 138,324.00m 139,576.00m 151,220.00m 156,985.0m Total Equity 71,781.00m 72,488.00m 78,202.00m 87,561.00m 90,810.00m ROE 76.38% 0.53% 8.82% 8.74% 10.02% Graph of Net Income Net income
  • 34. Debt management ratio The debt ratio measures the percentage of funds provided by noncurrent liabilities and equit Ehrhardt and Brigham (2009) argued that “creditors prefer low debt ratios because the lower the ratio, the greater the cushion against creditors‟ losses in the event of liquidation”, and “stockholders, on the other hand, may want more leverage because it magnifies expected earnings” . Leverage ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. A low debt to equity ratio indicates lower risk, because debt holders have less claims on the company's assets. A debt to equity ratio of 5 means that debt holders have a 5 times more claim on assets than equity holders. A high debt to equity ratio usually means that a company has been aggressive in financing growth with debt and often results in volatile earnings. It is also known as Debt/Equity Ratio, Debt-Equity Ratio, and D/E Ratio. Formula Debt to Equity = (Long Term Debt + Current Portion of Long Term Debt) / Total Shareholders' Equity Mar10 Mar11 Mar12 Mar13 Mar14 deb2equity .48 .44 .44 .43 .56 Price to Earnings Ratio The price to earnings ratio (PE Ratio) is the measure of the share price relative to the annual net income earned by the firm per share. PE ratio shows current investor demand for a company share. A high PE ratio generally indicates increased demand because investors anticipate earnings growth in the future. The PE ratio has units of years, which can be interpreted as the number of years of earnings to pay back purchase price. PE ratio is often referred to as the "multiple" because it demonstrates how much an investor is willing to pay for one dollar of earnings. PE Ratios are sometimes calculated using estimations of next year's earnings per share in the denominator. When this happens, it is usually noted. Price to Earnings Ratio = Price / Earnings Per Share (EPS) Mar10 Mar11 Mar12 Mar13 Mar14 PE 6.32 7.95 8.63 155.20 .99
  • 35. 4.2 overall evaluation of strategies Vodafone emerging markets are performing well, although vodafone mature European markets continue to face challenging conditions. However, company have continued to make good progress in delivering long-term strategy, by building firm foundations for the future with substantial investments in Vodafone Red, Project Spring and unified communications. It has been a year of substantial strategic progress. The sale of Verizon Wireless stake has rewarded shareholders for their support, and enabled the acceleration of strategy through the acquisition of Kabel Deutschland, the pending acquisition of Ono and our Project Spring investment programme. Vodafone operational performance has been mixed. The Group’s emerging markets businesses have performed strongly throughout the year: company executed their strategy well and have successfully positioned themselves for the rapid growth in data. In Europe, they are continue to face competitive, regulatory and macroeconomic pressures, but they have taken steps to improve their commercial performance, particularly in Germany and Italy, and are beginning to see encouraging early signs.  Verizon Wireless transaction The sale of vodafone 45% interest in Verizon Wireless, the leading mobile operator in the United States, was the culmination of a highly successful 14 year investment which began when Verizon and Vodafone entered into a partnership to create Verizon Wireless in 2000.They had been very happy to stay invested in the business over the years, despite their minority position, because of the strong growth and returns generated, and the attractiveness of the US market. However, the Board viewed the offer of US$130 billion as a very attractive price at which to exit. The completion of the transaction enabled company to return a record US$85 billion to shareholders, while retaining ample financial flexibility to pursue our own strategy both organically and through targeted acquisitions.  Strategic progress vodafone had made very substantial progress on their strategy in the past year, despite the significant challenges faced in Europe. With the acquisition of Kabel Deutschland in Germany and the planned purchase of Ono in Spain, their continued fibre build in Portugal and Spain, and their fibre plans in Italy, allied to last year’s acquisition of Cable & Wireless Worldwide in the UK, they are becoming a leader in unified communications across Europe. This enables them to access a large and growing fixed revenue pool where their market share is currently much lower than in mobile, while also helping company defend mobile business from converged offers.They are continue to provide a market-leading network experience in most of our markets, and now have 4.7 million 4G customers across 14 countries – all major European markets, as well as South Africa, Australia and New Zealand. Early experience from 4G shows us that customers use roughly twice as much data compared to 3G data usage, driven principally by video streaming. Vodafone aim to be five years from now  Project Spring Project Spring is our organic investment programme which will allow us to accelerate and extend our strategic priorities through investment in mobile and fixed networks, products and services,
  • 36. and our retail platform. Announced alongside the Verizon transaction in September 2013, Project Spring will strengthen further our network and service differentiation. The transition to 4G and unified communications, coupled with an improved economic outlook for Europe, lead us to believe Vodafone has a unique opportunity to invest now. We expect total investments, including Project Spring, to be around £19 billion over the next two years. The main elements of our investment are:  4G in Europe: we aim to reach 91% population coverage by March 2016.  3G in emerging markets: with 95% population coverage in targeted urban areas in India by March 2016.  Next-generation fixed line infrastructure: laying fibre to more base stations and deep into residential areas across Europe and in selected emerging market urban areas.  Development of enterprise products and services: Extending our M2M reach to 75 countries and rolling out hosting and IP-VPN services internationally; and investment in our retail estate: modernising 8,000 of our stores to improve the customer experience. 4.3 Monitoring & Control The Monitoring and Controlling process oversees all the tasks and metrics necessary to ensure that the approved and authorized project is within scope, on time, and on budget so that the project proceeds with minimal risk. This process involves comparing actual performance with planned performance and taking corrective action to yield the desired outcome when significant differences exist. Monitoring and Controlling process is continuously performed throughout the life of the project. Financial and accounting sector: - The financial management information system has become an integral part of every small and big business companies. FMIS helps to compile all the account related information from the different departments of the company including the operations, sales and marketing, HR and makes it available in an easy format to the chief financial officer. The CFO then analysis the profit and losses of the company, past and present financial transactions made by the company and also uses it to control and monitor the available funds for the right purpose.Vodafone Essar’s financial department uses the most competent SAP system to manage the accounts and compile the information in a fast and easy way.  SAP- Initially the full form was “System analyse und programmentwicklung” in German language. It is actually System analysis and programme development. System working and benefits-  General ledger- this system automatically makes an entry of all the transactions in the general ledger. It also side by side updates this information in the specific accounts like trade receivables, trade payables, personal, sales, inventory, etc and these all accounts together make the “chart of accounts”. Hence the system helps in keeping a permanent record of the accounts.  Cash management- helps in balancing the cash inflow and outflow. Highlights the area where cash is used up like in buying high cost raw materials, inventory expenses, etc.
  • 37. Depending on the company’s expenses it can regulate the price at which Vodafone sells its sim cards, internet services and also helps deciding the roaming charges, call charges, message schemes, plans, etc.  Budget planning- modifies the financial ratios to help predict the future scenarios and also in setting the financial goals for the company.  Financial reporting- the system not only uploads the transactions directly in the general ledger but it also makes financial statements used for internal reports and share holder use. Compliance with the government regulations, accounting standards and auditing requirements are also made easy.  Reduced finance costs and workload- initially before the invention of computers accounts were maintained in account books and were written manually. To reduce this tedious work computers came into the market but did not possess an advanced technology to maintain complex accounts. Later came, the SAP system which not only could manage the various accounts but also could automatically upload any transactions occurring in every account. This reduced the time and cost of writing and managing accounts. In global companies like Vodafone which extends its branches all over the world SAP system serves as a boon for managing the finances.  Other benefits- making trial balance reports, profit and loss reports, balance sheet, generating bills according to the customer chosen schemes and plans, etc. Operations support system (OSS) and Business support system (BSS) Vodafone and many other telecommunication companies use these systems mainly to manage the billing procedure which were done manually many decades ago. These systems mainly help in managing networking components, provisioning services and for billing in the accounting sector. Telecommunications billing is the process of adding together rated calls or services for a certain user or group of users, applying discounts and preparing the data for invoicing.  OSS in processing CDR- Call detail record (CDR) or Station message detail recording (SMDR) is a file containing all the necessary information regarding the time of call, origin of the call, call duration, call charge, total usage time in the billing period and the free minutes left in the billing period. If Vodafone is providing some of its customers with itemized bills then CDR will show up in each bill in a format similar to the long distance itemized bill generated by a conventional telecom company. In a telephone exchange, a CDR contains information about all the calls passing through the exchange. The CDRs are generated by Automatic Message Accounting (AMA) and processed by the operations support system (OSS). With the help OSS the CDR, RAP and TAP data into simple binary encoded data into XML or ASCII. (Refer appendix 2.0).  AMDOCS- Amdocs is a global company which provides Vodafone with its billing solutions through the OSS and BSS. The company leads in providing customer relationship management software but also plays an important role in providing financial solutions. The various features provided by the company are-
  • 38.  Convergent billing system-The system assists Vodafone service providers with appropriate charging and billing system. By this system provided by Amdocs, the hardware and software costs were reduced by 70% and comparison and combination of prepaid and postpaid services was possible.  Invoicing- The system has the capabilities of operating multiple currency bills, managing scheduled as well as on- demand bills, combines prepaid and postpaid bill and also includes discounts and charges in a billing cycle.  Accounts receivable- The system integrates a third party general ledger and enables automatic accounting processes according to the standards and policies. Also manages customer account’s balance by performing every transactions like fund transfer, adjustments, back outs and other financial activities. SAS- Statistical Analysis Software Financial Intelligence This software is mainly used to generate financial reports at a faster rate, in forecasting the future scenario, risk management and simulation problems are also tackled well by this system. SAS Financial Intelligence components help in increasing the profit margins and further assist in improving the accuracy of the financial reports and balance sheets. There are 4 components of SAS Financial Intelligence are:-  SAS Activity- based management- mainly helps by identifying the capital consuming areas and capital generating areas and helps in making decisions that streamline processes.  SAS Financial management-budgeting and planning is done by this system. Assist in making several reports, financial statements and handling various accounts.  SAS Profitability management- provides solutions to increasing profits.  SAS Strategy management- helps the company gain focus on the main goals and to remove the flawed strategies which may prove to be very expensive for the company.  SAS Financial Management- the system is very useful in going through the accounts of the company in no time and making future predictions for further business deals. Processes and generates financial reports very quickly, communicates the planning strategies, budgets, annual reports among various departments of the company making the work easier at every business level. The system also generates reports according to the guidelines mentioned in the IFRS (International Financial Reporting Standards) and sends a copy of the report to GAAP (Generally Accepted Accounting Principles) and IFRS and so there is no need to re check the validation of the reports.
  • 39. PART-5 5.1 Vodafone customer base: Britain-based Vodafone is the second largest mobile service provider on the planet after China Mobile. The company has about 435 million subscribers in 26 countries around the world. Recently, Vodafone reported group revenue of £10.2 billion ($17.3 billion) after the quarter that ended in June 2014. While this was up 6.2% on an absolute basis year-on-year given the strong pound currency, it was down 4.4% on organic basis. Organic revenue measures comparable performance, therefore excludes any M&A activity and fluctuation in foreign exchange rates. The company did not disclose profit figures in its most recent financial report but it had a net profit of £4.6 billion ($7.8 billion) at the end of financial year 2013-14. This excluded the money it made from selling the Verizon Wireless stake in US. Vodafone provides cellular network voice and data services in the following countries – Germany, Italy, United Kingdom, Spain, Netherlands, Ireland, Portugal, Romania, Greece, Czech Republic, Hungary, Albania, Malta, India, Turkey, Australia, Egypt, New Zealand, Qatar, Ghana, South Africa, Tanzania, Congo, Mozambique, Lesotho and Kenya. Some of their operations in these countries are through joint ventures. Vodafone also runs fixed home, enterprise and cable networks in a few regions and these operations form about 15% of the group’s revenue. Despite having big presence across various regions, Vodafone has faced multiple challenges in the past few years. Vodafone’s customer base of 435 million in various parts of world is its biggest asset. It is either the market leader or is among the top 3 service providers in every country. Such strong position often implies financial leverage, larger capacity to absorb risks and greater capability to steer the market direction. Geographically diversified business – Looking closely at the countries listed above, it is easy to conclude that Vodafone has a presence in all kinds of mobile markets. Developed markets like Germany and UK bring bulk of revenue. Then there are markets like India that have immense growth potential both in voice and data. So declining business in one region can be compensated by growth in another. Developed and advanced network – While not necessarily the trailblazer of LTE network launch in its areas of operation, Vodafone deployed LTE and high-speed wireless networks in most of its markets within a few years of spectrum allocation or ecosystem stabilization. In 2010, Vodafone had LTE running in Germany for the first time. Within the next 2 years, they followed it up by launching LTE in Portugal, Romania, Spain, UK, Australia, South Africa and many other nations. Networks in India, Egypt and Turkey are also in the process of upgradation. Similarly, in the first half of the last decade, the operator was aggressive in providing 3G services. The overall perception of Vodafone’s wireless network is positive in most countries. Strong brand recognition – Aggressive strategy, creative advertising, decent customer service and employee-friendly policies have helped Vodafone in cementing its place among the better
  • 40. brands of the world. This makes it easy for them to win new customers and retain the existing base. Number of Vodafone mobile customers in 2014, by country/market (in millions) 0 20 40 60 80 100 120 140 160 180 mobile customers in millions brands of the world. This makes it easy for them to win new customers and retain the existing base. Number of Vodafone mobile customers in 2014, by country/market (in millions) mobile customers in millions mobile customers in millions brands of the world. This makes it easy for them to win new customers and retain the existing base. Number of Vodafone mobile customers in 2014, by country/market (in millions) mobile customers in millions
  • 41. Board of directors Name Age Since Current Position Gerard Kleisterlee 67 2011 Non-Executive Chairman of the Board Vittorio Colao 52 2008 Chief Executive, Executive Director Nicholas Read 48 2014 Chief Financial Officer, Director Paolo Bertoluzzo 47 2012 Chief Executive Officer, Southern Europe Philipp Humm 54 2012 Chief Executive Officer, Northern & Central Europe Serpil Timuray 44 2014 Chief Executive, Africa, Middle East and Asia-Pacific Stephen Pusey 52 2009 Chief Technology Officer, Executive Director Rosemary Martin 54 2010 Group General Counsel, Company Secretary Ronald Schellekens 50 2009 Group Human Resources Director Warren Finegold 57 2009 Group Strategy and Business Development Director Nicholas Jeffery 41 2013 Group Enterprise Director Matthew Kirk 52 2009 Group External Affairs Director Crispin Davis 2014 Non-Executive Director Clara Furse 57 2014 Non-Executive Director Valerie Gooding 62 2014 Non-Executive Director Renee James 49 2011 Non-Executive Independent Director Samuel Jonah 2009 Non-Executive Independent Director Omid Kordestani 49 2013 Non-Executive Independent Director Nick Land 66 2006 Non-Executive Independent Director Luc Vandevelde 63 2012 Senior Non-Executive Independent Director Philip Yea 2005 Non-Executive Independent Director Anthony Hamilton Senior Manager - Investor Relations
  • 43. Gerard Kleisterlee Mr. Gerard J. Kleisterlee is Non-Executive Chairman of the Board of Vodafone Group Plc. Gerard Kleisterlee, aged 67, became Chairman of Vodafone Group Plc on 26 July 2011 at the conclusion of the AGM, having previously served as a non-executive member of the Board. He retired as President/Chief Executive Officer and Chairman of the Board of Management and the Group Management Committee of Koninklijke Philips Electronics N.V. (‘Philips’) on 31 March 2011 after a career with Philips spanning three decades. He has been a member of the Daimler AG Supervisory Board since April 2009, a non-executive director of the Supervisory Board and member of the Audit Committee . Vittorio Colao Mr. Vittorio Colao is Chief Executive, Executive Director of Vodafone Group Plc. Vittorio Colao, Chief Executive, aged 52, was appointed Chief Executive of Vodafone Group Plc after the AGM on 29 July 2008. He joined the Board in October 2006 as Chief Executive, Europe and Deputy Chief Executive. The early part of his career was spent in the Milan office of McKinsey & Company working on media, telecommunications and industrial goods, with additional responsibility for recruitment. In 1996 he joined Omnitel Pronto Italia, which subsequently became Vodafone Italy, and he was appointed Chief Executive in 1999. He was then appointed regional Chief Executive Officer, Southern Europe for Vodafone Group Plc in 2001, became a member of the Board in 2002 and was appointed to the role of Regional Chief Executive Officer for Southern Europe, Middle East and Africa for Vodafone in 2003. In 2004 he left Vodafone to join RCS MediaGroup, the leading Italian publishing company, where he was Chief Executive until he rejoined Vodafone as CEO, Europe. He sits on the International Advisory Board of Bocconi University, Italy and is a Member of the Steering Committee of the European Round Table of Industrialists. Nicholas Read Mr. Nicholas Jonathan Read has been appointed as Chief Financial Officer, Director of Vodafone Group Plc., effective April 1, 2014. He has been appointed as Chief Financial Officer - Designate of the Company effective January 1, 2014 until April 1, 2014. He was appointed to the position of Chief Executive Officer, Asia Pacific and Middle East Region and joined the Executive Committee in November 2008. His role was then expanded to include Africa in October 2010. Nick joined Vodafone in 2001 and has held a variety of senior roles including Chief Financial Officer and Chief Commercial Officer of Vodafone Limited, the UK
  • 44. operating company, and was appointed Chief Executive Officer of Vodafone Limited in early 2006. Prior to joining Vodafone, he held senior global finance positions with United Business Media plc and Federal Express Worldwide.
  • 45. Paolo Bertoluzzo Mr. Paolo Bertoluzzo has been appointed as Chief Executive Officer, Southern Europe of Vodafone Group Plc., effective August 1, 2012. Paolo Bertoluzzo, aged 47, Group Chief Commercial and Operations Officer, was appointed to the Executive Committee with effect from 1 August 2012, when he became Chief Executive Officer, Southern Europe. He became Chief Executive Officer of Vodafone Italy in 2008, a role he continues to hold. He has also been a member of the Board of Vodafone Italy since 2006. He joined Vodafone in 1999, and held the post of Chief Commercial Officer (2007), Chief Operating Officer (2006), and led the Consumer Division of Vodafone Italy (2005). He was a member of the Board of Vodacom from January 2010 to September 2012 and served as a Board member of Vodafone Ireland between November 2005 and February 2007. Paolo is Deputy Chairman of Asstel, the trade association representing the interests of telecommunications companies members of Confindustria (the Confederation of Italian Industry), and sits on the Board of Confindustria Digitale, the industrial federation promoting digital economy in Italy. After graduating in 1990 in Management Engineering from the Politecnico di Milano, he obtained an MBA from INSEAD at Fontainbleau in France in 1994 and began his career in management consulting, working in Italy and the United States. Philipp Humm Mr. Philipp Humm has been appointed as Chief Executive Officer, Northern & Central Europe of Vodafone Group Plc., effective October 1, 2012. Philipp Humm, aged 54, Regional CEO Europe, joined Vodafone as Chief Executive Officer, Northern and Central Europe and was appointed to the Executive Committee with effect from 1 October 2012. Before taking up this role, he was President and CEO of T-Mobile USA. Previously, he was Chief Regional Officer Europe and a member of the Executive Committee of T-Mobile International and prior to that, CEO and Chief Sales Officer for T-Mobile Germany. His past experience includes time with McKinsey & Company; the German grocery retailer, Tengelmann, where he became CEO of Plus, their food discounter; and Amazon, where he held roles as Managing Director of Amazon Germany and France and Vice President Europe. He began his career at Procter & Gamble. Serpil Timuray Ms. Serpil Timuray has been appointed as Chief Executive, Africa, Middle East and Asia-Pacific of Vodafone Group PLC., effective January 1, 2014. She was appointed Chief Executive of Vodafone Turkey in 2009.
  • 46. She was appointed as a Director on the Board of Vodacom Group in South Africa in September 2012. Previously General Manager with Danone Turkey, Serpil Timuray began her career with Procter and Gamble. She will be succeeded as Vodafone Turkey Chief Executive by Gokhan Ogut who is currently Vodafone Turkey Chief Commercial and Operations Officer.
  • 47. Stephen Pusey Mr. Stephen C. Pusey is Chief Technology Officer, Executive Director of Vodafone Group Plc. He joined Vodafone in September 2006 and the Board with effect from 1 June 2009. He is responsible for all aspects of Vodafone’s networks, IT capability, research and development. Prior to joining Vodafone, he held the positions of Executive Vice President and President, Nortel EMEA, having joined Nortel in 1982, gaining a wealth of international experience across both the wireline and wireless industries and in business applications and solutions. Prior to Nortel, he spent several years with British Telecom. Stephen is a graduate of the Advanced Management Program at Harvard University. Rosemary Martin Ms. Rosemary E. S. Martin is Group General Counsel, Company Secretary of Vodafone Group Plc., since March 2010. She previously served as CEO of the Practical Law Group, having previously spent 11 years with Reuters Group Plc in various company secretary and legal roles, with the last five years as Group General Counsel and Company Secretary. Before joining Reuters, she was a partner with Mayer, Brown, Rowe & Maw. Rosemary was admitted as a solicitor in 1984 and holds a degree in Philosophy and Literature and an MBA in Legal Practice. She is a director of several UK institutions including the Legal Services Board and the Institute of Chartered Accountants of England and Wales Corporate Governance Committee. She is also a non-executive director of HSBC Bank Plc (the European arm of HSBC Group), and a former member of the Financial Services Authority’s Listing Group Advisory Committee. Ronald Schellekens Mr. Ronald Adrianus Wilhelmus Schellekens is Group Human Resources Director of Vodafone Group Plc. Ronald Schellekens, aged 49, Group HR Director, joined Vodafone and the Executive Committee in January 2009. He is responsible for the Vodafone Human Resource Management function, as well as Health & Safety and Vodafone's Property and Real Estate. Prior to joining Vodafone, Ronald was Executive Vice President Human Resources for Royal Dutch Shell Plc’s global downstream business. Prior to working for Shell, he worked for PepsiCo for nine years in various international, senior human resources roles, including assignments in Switzerland, Spain, South Africa, the UK and Poland. In his last role, he was responsible for the Europe, Middle East & Africa region for PepsiCo Foods International. Prior to PepsiCo, he worked for nine years for AT&T in Human Resources roles in the Netherlands and
  • 49. Warren Finegold Mr. Warren Finegold is Group Strategy and Business Development Director of Vodafone Group Plc. Warren Finegold, aged 56, joined the Executive Committee in April 2006 as Chief Executive, Global Business Development with responsibility for mergers and acquisitions and business development. He assumed his current posiiton in August 2009 when his role was expanded to include Group Strategy. He started his career with Hill Samuel & Co. Limited as an Executive in the Corporate Finance department, advising clients on mergers and acquisitions. He then moved to Goldman Sachs International in 1986 where he held positions in New York and London. Prior to joining Vodafone, he was a Managing Director of UBS Investment Bank where he held a number of senior positions, most recently as head of its technology team in Europe. Nicholas Jeffery Mr. Nicholas Jeffery is Group Enterprise Director of Vodafone Group PLC., since January 2013. Prior to this, he was Chief Executive of Cable & Wireless Worldwide. Nick joined Vodafone in 2004 and was appointed Chief Executive of Vodafone Global Enterprise in 2006. He began his career with Cable & Wireless plc (Mercury Communications) in 1991 and led the company’s UK and international markets business units. Matthew Kirk Mr. Matthew Kirk is Group External Affairs Director of Vodafone Group Plc. Matthew Kirk, aged 52, Group External Affairs Director, was appointed to his current position and joined the Executive Committee in March 2009. Matthew joined Vodafone in 2006 as Group Director of External Relationships. Prior to that, he was a member of the British Diplomatic Service for more than 20 years and before joining Vodafone served as British Ambassador to Finland. Crispin Davis Sir Crispin Henry Lamert Davis has been appointed as an Non-Executive Director of the Company effective July 28, 2014. He was the Chief Executive of Reed Elsevier plc from 1999 to 2009. He was previously Chief Executive of Aegis Group plc and the Group Managing Director of Guinness Group plc (now Diageo plc). Sir Crispin began his executive career with Procter & Gamble, where he held a variety of senior management roles including as President of the Company's North American Food Business. In his non-executive career, Sir Crispin was the Chairman of StarBev Consumer Industries B.V. from 2009 to 2012 and was a Non-Executive Director on the Board of GlaxoSmithKline plc from
  • 50. 2003 to 2013, where he chaired the Remuneration Committee. Currently an advisor to CVC Capital Partners, Sir Crispin was knighted in 2004 for services to publishing and information. He is an Oxford University Trustee and Member of the University Board.