Vodafone 2005 Annual Report Download - page 9

Strategy |7
One of the key elements in delighting our customers was the launch in November
2004 of our 3G consumer service, Vodafone live! with 3G. This service fundamentally
changes mobile telecommunications for our customers and gives Vodafone a platform
to deliver a market leading, differentiated proposition. Most importantly, it represents a
significant ongoing growth opportunity for the Group through new and enhanced
services, additional network capacity and innovative pricing.
Creating new and enhanced services
Customers have been enjoying Vodafone live! services on 2.5G since its launch in
October 2002. With the introduction of 3G, these services are enhanced through greater
data speed and capacity, providing a better customer experience. Faster network speed,
more network capacity and increasingly sophisticated devices also means many new
services can be delivered to the mobile. The result is clearer pictures, more exciting
games and better music and sound quality. We now offer 3D games, full track music
downloads with CD-like quality in addition to real music and polyphonic ringtones and a
wider range of video based services, including video calling and higher quality film, music
and entertainment clips. We have also significantly increased the range and depth of
content as mobile has become a more attractive channel to content providers.
But 3G is not all about consumer services, as it provides a significant enhancement to
business offerings as well. This has been most evident with the Vodafone Mobile
Connect data card, which enables business customers to connect to their office
systems whilst on the move. Greater speed and capacity means much easier access
and use of email and other office applications – our customers can now use their
laptops as if they were in the office. We have expanded our push email offerings
recently and are also working closely with a number of leading IT industry players to
bring historically fixed line internet services to the mobile world.
Capturing more minutes
3G provides significantly more capacity in our networks. This gives us the ability to
drive voice minutes that are currently carried on fixed lines onto mobile networks, so
called fixed to mobile substitution, and therefore generate additional revenue. To put
this opportunity into perspective, approximately two thirds of all voice traffic in Europe
today is carried on fixed line networks, offering significant market expansion potential
for Vodafone in voice minutes.
Offering innovative pricing
Whilst we can now offer a much richer customer experience, the key to generating
additional revenue is to encourage customers to use more services and increase their
mobile spending, in an environment where people want simplicity and more value at
lower cost.
To deliver on this basic customer need, we plan progressively to introduce price plans
that bundle voice and data services together within an attractive value proposition for
our customers, whilst at the same time encouraging higher usage. The more cost
efficient nature of the new technology also enables us to provide these additional
services and revenue without incurring a substantial change in underlying costs,
thereby creating value for shareholders.
Customer management
With rising customer expectations and increasing choice, effective customer management
is increasingly important. We seek regular feedback on customer satisfaction and brand
preference and closely monitor network performance. We also offer a wide range of
attractive loyalty schemes so as to maximise customer retention. In highly penetrated
markets, customer retention is a critical driver of market and financial success.
Driving revenue growth
We aim to delight our customers through tailoring services to what they really want.
We believe the combination of new and enhanced services, greater value offerings and
effective customer management will drive revenue growth.
Vodafone live! with 3G delivers an end-to-end customer service through the combined
effect of being first to market with the widest and best range of handsets and the most
exciting services; providing content from leading providers; offering innovative and
value driving pricing; and all of this in a common way across our high quality networks.
But we are doing more than just focusing on 3G; we are expanding our business
services, offering an uncomplicated mobile experience through Vodafone Simply and
have simplified and increased the value to customers of our roaming tariffs. Our focus
on customer needs provides the basis for the future.
March 2003
March 2004
March 2005
154.8
133.4
119.7
110.1
97.0
87.7
Subsidiaries + Others = Total
Total
(millions)
March 2003 28.6
27.8
March 2004 32.7
31.9
March 2005 34.1
33.2
Total
(£bn)
34.1
33.2
33.6
31.9
30.4
27.8
Continuing operations + Discontinued operations = Total
Mobile turnover
March 2004
March 2005
March 2003
12.7
7.8
10.5
12.1
7.7
5.0
Total
(£bn)
12.7
7.8
12.3
8.5
11.1
5.2
Discontinued operations and, in the year ended 31 March 2004,
free cash flow from the closure of certain financial instruments
Net cash flow from operating activities
Free cash flow
Proportionate customers Turnover Cash flow