Vodafone 2014 Annual Report Download - page 26

Making good progress on unied communications strategy
Our strategy (continued)
Unied
Communications
Our roots are in mobile services, and these still represent the majority
of our revenues. However, more and more businesses and individual
consumers are seeking unied communications, or converged xed and
mobile services, and we are changing the shape of our Company to meet
thisdemand.
What is unied communications?
As customer demand for ubiquitous data and content grows rapidly
over the coming years, the most successful communications providers
will be the ones who can provide seamless high speed connectivity
at home, at work, at play and anywhere in between. This will require the
integration of multiple technologies – 3G, 4G, WiFi, cable and bre – into
a single meshed network offering the best, uninterrupted experience –
what we call “unied communications”.
Unied communications for enterprise
Combined xed and mobile services have been a feature of the
enterprise market, particularly for small- and medium-sized companies,
for several years. We have been a market leader with products such
as Vodafone One Net, which provides integrated xed and mobile
services which create signicant business efciencies for customers.
This year we have evolved One Net as an application that can also serve
the needs of larger national corporates as well.
With the acquisition of Cable & Wireless Worldwide in 2012, we have
made a step change in our ability to offer unied communications
services to customers in the UK and gained an extensive international
footprint. After successfully integrating sales forces this year, we are now
beginning to build a strong pipeline of new business.
Unied communications for consumers
Over the last few years, we have seen a signicant move towards
bundling of xed and mobile products for residential customers, often
including television in the package as well. Of our markets, Spain
and Portugal are the most advanced in this regard, but we expect
it to become prevalent in all our major European markets. This presents
us with a clear opportunity, as our share of xed services in our
European markets is under 10%, whereas our share of the mobile
market is well over 25%. In addition, mobile customer churn is typically
three times higher than that of customers taking combined xed and
mobile services.
However, unied communications is also a threat, particularly in the
residential market, as historically we have not owned or had access
to next-generation xed line infrastructure such as bre or cable.
This could allow cable operators with MVNO platforms, or integrated
xed and mobile incumbents, to take share in the market with
aggressively discounted offers.
Progressing our strategy
Our goal is to secure access to next-generation xed line infrastructure
in all our major European markets. Our approach is market-by-market,
based on the cost of building our own bre, the openness of the
incumbent provider to reasonable wholesale terms, the speed of market
development, and the availability of good quality businesses to acquire.
The table below shows the progress we have made this year. We have
made signicant strides in most of our major markets, through three
routes to market – wholesaling (or renting), our own bre deployment,
or acquisitions. In particular, the acquisition of Kabel Deutschland and
the proposed purchase of Ono will signicantly strengthen our position
in Germany and Spain respectively. At the year end, we had nine million
xed broadband customers, and the proposed acquisition of Ono will
increase this to 11 million.
Outside Europe, we acquired TelstraClear in New Zealand, the second
largest xed operator, in 2012 to strengthen our portfolio of xed
products and services and create a leading total communications
company. We also intend to expand selectively high speed bre services
to urban areas in emerging markets to enable converged services
in key business areas. And our subsidiary, Vodacom, proposes to acquire
Neotel, the second largest provider of xed telecommunications
services in South Africa, for a total cash consideration of ZAR 7.0 billion
(£0.4 billion) to accelerate its growth in unied communications
products and services.
Our recent acquisitions
Data to March 2014 Kabel
Deutschland Ono (proposed)
Market position Largest cable
operator in Germany Largest cable operator in Spain
Purchase price €10.7bn €7.2bn
Annual revenue €1.9bn €1.6bn
Homes passed 15.2m 7.2m
Total customers 8.3m 1.9m
Fixed broadband
customers
2.3m 1.6m
Our strategic approach to next-generation xed access
Italy
(2013)
Germany
(2013)
Netherlands
(2013)
Wholesale
Italy
(planned for 2014)
Spain
(2014)
Portugal
(2010)
Fibre deployment
Spain
Ono (proposed 2014)
Germany
Kabel Deutschland (2013)
UK
Cable & Wireless
Worldwide (2012)
New Zealand
TelstraClear (2012)
Acquisitions
Vodafone Group Plc
Annual Report 2014
Vodafone Group Plc
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