Vodafone 2000 Annual Report Download - page 9

Vodafone AirTouch Plc Annual Report & Accounts for the year ended 31 March 2000 7
Business Review continued
services in the US market. During the year, the total number of retail
outlets increased by 222 stores to 316 at 31 March 2000. Customers
connected through wholly owned retail operations are less expensive to
connect and, at the present time, churn is at a significantly lower rate.
On 6 January 2000, the outstanding share capital of CommNet was
acquired. CommNet operates wireless services in the mid-west of the
United States and had over 402,000 customers at acquisition.
On 15 March 2000, AirTouch pre-launched the Group’s global platform
for mobile data and Internet services in Michigan, Ohio, Oregon and
Washington. By mid-May, 81,000 customers were connected to the
service, with new activations being made at a rate of between 800 and
1,200 per day.
The US paging business had 3.5 million customers at 31 March 2000
and continued to trade profitably during the year.
Bell Atlantic joint venture
On 3 April 2000, Verizon Wireless was created by the combination of
Vodafone AirTouch’s and Bell Atlantic’s US cellular, PCS and paging
assets. Further businesses will be contributed to the joint venture
following the anticipated completion of the merger between Bell Atlantic
Corp. and GTE Corp., when Verizon Wireless will rank as the market
leader in the US wireless industry, serving more than 23 million
customers and covering 96 of the top 100 US markets. The Group will
have a 45% shareholding in this new venture and has nominated three
of the seven board members and one executive officer.
Verizon Wireless will have the national scale and scope to realise
revenue enhancements, cost savings and capital efficiencies. The
company will achieve cost savings through reduced roaming costs and
increased economies of scale in transport, billing volumes, handset
purchases and advertising. Combining common CDMA technology
platforms will also yield capital efficiencies, simplified integration and
superior network quality.
Vodafone AirTouch and Bell Atlantic have announced that they are
planning an Initial Public Offering for Verizon Wireless.
Australia, New Zealand and Fiji
The Group’s interests in Australia, New Zealand and Fiji increased their
proportionate customers by 726,000 to 1,795,000 at 31 March 2000,
an increase of 68%. This increase in customers has driven strong
growth in revenue and operating profit.
Vodafone Australia increased its customer base by 48% in the year
ended 31 March 2000 to 1,440,000 customers, 18% of the total
Australian digital market. From April 2000, Australian customers were
among the first in the world to access an early release of the Group’s
global platform for mobile data and Internet services.
Strong growth continued in New Zealand and its customer base was
473,000 at 31 March 2000, an increase of more than 290,000
customers in the year. Since acquiring this operation on 30 October
1998, the customer base has grown by more than 263%. Vodafone
Fiji, in which the Group has a 49% shareholding, increased its
customer base by 200% during the year, to 24,000 customers at
31 March 2000.
The Group is making necessary preparations to proceed with an Initial
Public Offering of these interests through Vodafone Pacific and will
continue to monitor market conditions in order to assess the optimal
timing for the Offering.
Japan
During the year, the Group increased its equity interests to more than
20% in each of Japan’s nine regional mobile telecommunications
companies, becoming the second largest shareholder, behind Japan
Telecom, in each venture. The total consideration paid for the
increased ownership interests in the three Digital Phone and six Digital
Tu-Ka companies was £342m. At 31 March 2000, the Group’s
proportionate customers amounted to 1,907,000 with overall customer
growth in ventures in which the Group has an interest being 31% in
the year.
The nationwide roll-out of the Digital Phone Group’s “J-Phone” brand
to each of the six former Digital Tu-Ka companies has been very
successful. This will increase the ability of the renamed J-Phone
companies to compete in the Japanese mobile telecommunications
market.
“SkyWalker”, the J-Phone short message service, is proving to be
very popular and is currently used by as many as 80% of J-Phone
customers in the Tokyo area. “J-Sky”, J-Phone’s Internet service,
was introduced in December 1999 and there are approximately one
million customers currently connected to this service across the
J-Phone companies.
On 30 March 2000, the Group announced that, together with its
partners, Japan Telecom and British Telecom, it had agreed to
restructure its interests in Japan ahead of the third generation
licence application in April 2000. The Group’s ownership interests
are substantially unchanged by the restructuring.
Satellite services
All major operational milestones were met for the Group’s satellite
services businesses in the US, Canada and Mexico in 1999, and
commercial service has been launched throughout North America.
Sales of services will be accomplished through a network of agents and
resellers, including sales channels established through Verizon Wireless.
In March 2000, the Group launched Vodafone Globalstar in Australia,
the country’s first ever fully integrated GSM/satellite mobile service.
Community and Environment
Responsibility
Vodafone is one of the world’s largest companies by capitalisation and
the Company recognises that size confers responsibility as well as
opportunity. Modern telecommunications demand coverage and reach
and, as a global company, Vodafone’s duty of care extends beyond its
employees, its customers and the communities in which they live to
standards of social responsibility upon which commercial relationships
depend and to the natural environment.
The Company is committed to the highest ethical and environmental
standards. In a rapidly growing business, now represented in every
established market of the world, the improvement of those standards is
bound to be a continuous process. The year 2000 marks a step change
in approach as Vodafone, AirTouch and Mannesmann are brought
together, enabling the Group to learn from the best of each to produce
a sustainable global strategy for all.