Vodafone 2005 Annual Report Download - page 10
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Please find page 10 of the 2005 Vodafone annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Chief Executive’s Review continued
8|Strategy
Implementing One Vodafone
Leverage scale and scope
Another key goal is to deliver fully the benefits of our scale and scope. As the Group
has expanded over the past few years, we have been able to achieve some significant
scale benefits. For example, as the volumes of network equipment and handsets we
have purchased from the same suppliers have increased, we have secured better
pricing. We have also harmonised the brand in many of our markets and started
offering common products and services. The One Vodafone programme builds on this
to further integrate our businesses and create sustainable competitive advantage.
The programme is focused on six major areas of our business, defined as networks,
service platforms, IT delivery, terminals, customer management and roaming. We aim
to leverage scale and scope through a combination of standardising designs and
processes, reducing duplication, centralising certain functions and sharing best
practice. The effect will be to improve our time to market with new offerings, create a
consistent customer experience across our networks and enable us to achieve a
strategic, lowest cost position.
During the year to March 2005, we have established objectives, plans and the
supporting organisation to deliver on our programme. Whilst we are in the early
stages, some initiatives are more advanced than others.
We are establishing an integrated network planning process to harmonise network
specifications across our operations and we have significantly reduced the duplication
of research projects across the Group. We have also created operational hosting
centres in Germany and Italy for the delivery of common services and our European
operations will be migrating to these centres over the next 18 months.
In May 2005, we announced our new roaming proposition that will be available across
14 markets, leveraging our unrivalled footprint. This is a significant step in reducing
roaming complexity for our customers. It offers simple pricing that is transparent to
customers so that they will know exactly what their charges will be when abroad. The
basic principle is that, where available, a customer’s home tariff will apply abroad, with
the same call set-up fee being charged for each call made.
The consumer launch of 3G saw us begin to offer converged, global handsets as we
introduced ten common handsets across our markets and we will develop this portfolio
going forward whilst still catering for specific local market needs.
IT delivery is one of the most complex areas as we aim to consolidate our business-
critical billing and customer support systems and will take place over a longer time
frame than the other initiatives. This will simplify our systems and lead to a lower cost
structure in the future.
For the year ahead, our focus will be on implementing our plans and beginning to deliver
improvements. The net benefit to us in the short term will be limited as we will incur costs
in centralising certain activities. The first substantial benefits are expected in the year to
March 2007, with the programme fully up and running in the year to March 2008.
Financial targets
The One Vodafone programme is targeted to deliver £2.5 billion of incremental pre-tax
operating free cash flow improvements in the year ending March 2008. This is an
annual benefit and is made up of cost savings of £1.4 billion and revenue
enhancements of £1.1 billion.
We expect that, in the year to March 2008, combined mobile operating and capital
expenditures will be broadly similar, in absolute terms, to the year to March 2004, even
after four years of projected revenue growth and assuming no significant changes in
foreign exchange rates and after adjusting for acquisitions and disposals.
Our revenue targets are equivalent to at least 1% additional revenue market share in
the year to March 2008 compared to the year to March 2005. We will measure this in
our five major controlled markets compared to our principal established competitors.
Build the best global Vodafone team
With effect from the beginning of 2005, we restructured the business to create a flatter
organisational structure that is better positioned to respond to the rising expectations of
our customers and to deliver on 3G and One Vodafone.
The previous regional structure has been simplified so that major countries and
business areas report directly to me. This new structure focuses more attention on
customers in Vodafone’s local markets, enhances our ability to deliver seamless
services and speeds up execution.
Networks
Service
Platforms
IT Delivery
Terminals
Roaming
Customer
Management
•Consolidate European service platforms
•Establish regional hosting centres in
Germany and Italy
•Migrate operating companies to hosting
centres over next 18 months
•Create a roadmap to consolidate billing
and CRM systems
•Develop an integrated network plan
•Standardise network design and purchasing
•Reduce network maintenance costs from
standardised networks
•Drive greater volumes of global handsets
•Focus on customisation and exclusivity
•Balance local needs against global scale
•Deliver simplified roaming offerings
•Optimise value from roaming through benefit
from scale and scope
•Develop co-ordinated and centralised support
activities for roaming
•Implement consistent, segment and value
based customer management
•Drive improvements in customer retention
and satisfaction