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Vodafone Group Plc Annual Report 2007 11
EMAPA
The EMAPA region covers Eastern Europe, Middle East, Africa and Asia,
Pacific and Affiliates, and includes the Group’s subsidiary operations in the
Czech Republic, Hungary, Romania, Turkey, Egypt, Australia and New
Zealand, joint ventures in Poland, Kenya, South Africa and Fiji, associated
undertakings in France and the US and the Group’s investments in China
and India.
The Group’s subsidiaries in EMAPA operate under the ‘Vodafone’ brand. The
joint ventures, associated undertakings and investments operate under the
following brands: China – China Mobile; Fiji – Vodafone; France – SFR and
Neuf Cegetel; India – Airtel; Kenya – Safaricom; Poland – Plus GSM; South
Africa – Vodacom; US – Verizon Wireless.
On 8 May 2007, the Group completed its acquisition of a controlling interest
in Hutchison Essar Limited (“Hutchison Essar”), a mobile telecommunications
operator in the Indian market, which operates under the ‘Hutch’ brand.
EMAPA’s results include the results from non-mobile telecommunications
businesses. The Group has a 17.91% indirect ownership in Neuf Cegetel, the
leading alternative operator for fixed telecommunication services in France,
offering a wide range of fixed line services to residential and business
customers as well as special corporate services ranging from internet and
customer relations management to internet and intranet hosting services.
The Group also has a direct and indirect interest constituting in aggregate a
9.99% ownership in Bharti Airtel, an Indian based mobile and fixed line
telecommunications operation with three strategic business units, mobile
services, broadband and telephone services and enterprise services. In
conjunction with the acquisition of Hutchison Essar Limited, a Bharti Group
entity agreed on 9 May 2007 to acquire 5.60% of Bharti Airtel from the
Group. Following the completion of this sale, the Group will continue to hold
an indirect stake of 4.39% in Bharti Airtel.
The mobile market share of the Group’s operators in its most significant EMAPA
markets, based on publicly available information, is estimated as follows:
Competition
The Group faces significant competition in each of its geographic markets.
It is subject to indirect competition from providers of other communications
services in the domestic markets in which it operates in addition to direct
competition from existing mobile communications network operators and
mobile virtual network operators (“MVNOs”) who do not operate a mobile
telecommunications network. There are also new types of competitors,
such as fixed line operators offering combined fixed and mobile service
offerings, and internet based companies extending their services to include
telecommunications. Competitive pressures impact the level of customer
churn, which the Group seeks to manage by a continued focus on tariffs and
customer acquisition and retention initiatives.
The Group expects that competition will continue from existing operators as
well as from a number of new market entrants, including those arising
following the award of new 3G licences and MVNOs. The scope of this
increased competition, and the impact on the results of operations, is
discussed further in “Performance – Risk Factors, Seasonality and Outlook”.
Many of Vodafone’s key markets are highly penetrated, some with
penetration rates of over 100% due to a number of customers owning more
than one subscriber identity module (“SIM”), which is, broadly, the Group’s
basis for defining a mobile customer. The penetration rates for the Group’s
operations in its principal markets, based on publicly available information,
is estimated as follows:
Business
020406080
Egypt
Australia
Romania
South
Africa
US
Customer market share (%)
At 31 December 2006
18
48
45
58
24
25
Turkey
Italy
UK
Spain
Germany
Estimated penetration – Europe (%)
At 31 December 2006
0 50 100 150 200
104
143
110
137
0 255075100
Australia
Egypt
India
Romania
Turkey
US
South
Africa
Estimated penetration – EMAPA (%)
At 31 December 2006
90
24
13
77
72
79
80