Vodafone 2004 Annual Report Download - page 7

Mobile telecommunications is one of the most dynamic industries today. Its potential is
vast. Today wireless technology only reaches one fifth of the world's population. In
fact, 2 billion people have never even made a phone call. I'm delighted by the
prospect that their first call could very well be made on a mobile phone.
In the coming years, the increasing number of mobile customers will enjoy a very
different range of services. With the arrival of 3G and other new technologies and the
significant increase in voice capacity and data rates they provide, the opportunity for
growth in this industry is tremendous. The wireless future holds even more ways for
people to share memorable moments, anywhere, anytime.
During my first year with Vodafone I have visited every part of our organisation, met
with customers, employees, business leaders, regulators and stakeholders. I have
reviewed our strategies, studied our operational practices and taken stock of the
business we are managing on behalf of our customers and our shareholders. I am
inspired by what I see.
Across our business we have plans to capitalise on market trends by applying our
understanding of customer needs and deploying systems and technology to deliver
high quality, great value, wireless services.
Our Position
This past year, Vodafone has delivered another set of solid financial results. We have
had excellent customer growth, good revenue growth, continued margin improvement
and generated outstanding free cash flow. As a result of this performance we propose
to increase the dividend by 20% and expand the share purchase programme we
introduced at the end of last year.
Today we operate across 26 markets, including 16 controlled operations. In addition,
through our Partner Network programme, we have a further presence in 13 markets
where we have a strong brand and service position without financial investment. More
than 50,000 Vodafone employees now serve 133 million proportionate customers.
I believe that our company is in an unprecedented position to take full advantage of
opportunities in the wireless world. All of us at Vodafone are working hard to grow
revenue, navigate the forces that impact our business and lay claim to the benefits of
our global scale and scope.
Opportunities for Growth
At Vodafone we predict significant growth will come from: Telecommunications,
Information Technology and Infotainment.
Voice remains at the heart of our business and there continues to be significant
demand. Today, only about 20% of voice usage is mobile, so we can expect some
portion of the remaining 80% to migrate to our networks. It is interesting to note that
the growth of mobile has not significantly eroded the value of the fixed line industry. In
effect, mobile has served to increase the value of the entire telecoms industry.
The second growth area is in Information Technology or what we think of as the
productivity market. We plan to grow revenues by mobilising office tools and software
applications. We have already begun by establishing a number of strategic
partnerships with other industry players aimed at unleashing powerful 'made for
mobile' applications over our 3G networks.
The third area where we see revenue growth potential is Infotainment – the
combination of information and entertainment. We have already seen eagerness for
these services through Vodafone live!TM. Our customers can take and send pictures,
browse branded infotainment, listen to audio files, watch video clips, play games and
customise ringtones with their favourite songs, all from an integrated camera phone
and an easy to use icon-driven menu.
Whilst we have made a strong start, the real opportunity to unearth more revenue
comes with 3G, when capacity and speeds are far better than those we have today.
We can't predict all of the applications that customers will want in the coming years
but we can anticipate their needs, build the infrastructure and platforms and
collaborate with companies that understand how to grant the freedom to play games,
watch television, conduct business and communicate anywhere and anytime.
Best of all, most of these activities are things people are already doing through
different media today. Our success doesn't require a big behavioural change. We are
simply mobilising those things that people are already accustomed to doing.
Forces on the Business
As we move forward, we must successfully navigate four forces impacting on our
business – customers, technology, competitors and regulation – addressing the
inherent opportunities and challenges they bring.
Our customers today expect more from us. They want to pay less yet get greater value
for their pound, dollar, euro or yen. They expect greater coverage and reliability.
Advances in technology hold the key to delighting our customers and we are fully
committed to making 3G deliver on its promises. We are investing significantly every
year in 3G and we are investing time and energy to encourage cooperation between
vendors so that the mobile environment can operate to global standards – that way
our customers get the best from our services wherever they go.
Another significant force impacting our business is competition. We face different
competitors across our markets, but we have a tremendous advantage. Vodafone can
draw from resources across all our markets and respond competitively in a way that
does not impact the performance of the organisation as a whole.
Regulation is also part of our everyday life. Regulators understand that Vodafone is an
important company in their respective countries. They are keenly aware of the
economic and social impact we have on their citizens and communities. We hope that
future decisions will continue to be made in the best interests of our customers and
the health of this vital global industry.
Annual Report 2004 Vodafone Group Plc
5
Chief Executive’s Statement