Vodafone 2014 Annual Report Download - page 28

Our strategy (continued)
Consumer
Emerging Markets
It’s easy to think of Vodafone as simply a European company, with its
headquarters in the UK, but the reality is that one third of our revenue
comes from countries outside Europe and most of this is in fast-growing
emerging markets where data demand is taking off.
Driving the mobile penetration opportunity
The number of customers in our emerging markets has grown steadily
and rapidly from 185 million, 57% of the Group total three years ago,
to around 302 million, representing 70% of the total today. This has been
driven by fast economic growth and rising populations. In our largest
emerging market, India, the proportion of the 1.2 billion population with
a mobile, commonly known as mobile penetration, is still only 78%,
so we expect to see a lot more growth going forward.
We have invested signicantly in our emerging markets to support and
drive this growth opportunity. We have expanded network coverage
by 8% to 161,500 base station sites, providing us with signicant scale
and broad coverage. We have increased the range of low cost Vodafone
branded devices, enabling more people on low incomes to access
mobile services. We have also lowered the cost of calls, with prices
as low as one US cent per minute in India, which, along with greater
network coverage, has helped drive growth in both the number users
and mobile usage.
The data opportunity
While mobile data usage to browse the internet or watch videos
is increasingly common in Europe, it is still at an early stage in emerging
markets. However, it is expanding quickly due to the growth
in customers and also the greater range and affordability of handsets.
In India, for example, the number of data users increased by 13 million
to 52 million over the course of last year. In Turkey, we now have
6.5 million smartphone users, up from 3.1 million only two years
ago. Outside South Africa, in our smaller southern African markets
of Tanzania, Lesotho, Mozambique and the DRC, the number of data
customers increased 86% to 7.7 million taking the total active data
customer base to 30% of total customers.
Enhancing distribution
Our distribution footprint in emerging markets consists of a range
of branded stores, franchised shops and small independent retail
recharging units. We have modernised over 250 stores in these markets
and we are targeting to reach over 2,300 by 2016. Our branded stores
are very attractive to customers wanting higher end smartphones
or monthly contract plans. In Egypt 95% of new contract customers
come to us through branded stores. In India we have the largest
footprint of 1.7 million point of sale sites for top-ups, signicantly more
than our nearest competitor, and to cater for our female customers
we are opening a number of new “Angel” stores, which are run and
managed exclusively by women.
Increasing access to mobile nancial services
Our Vodafone money transfer service, or M-Pesa as it is more
commonly known, enables people who have a standard mobile
phone, but with limited or no access to a bank account, to send and
receive money person to person, top-up airtime, make bill payments,
and in conjunction with the Commercial Bank of Africa to save and also
receive short-term loans.
We now have over 17 million active M-Pesa customers, an increase
of 18% over last year. During the year we launched in several new
emerging markets – India, Egypt, Lesotho and Mozambique. In India
the service has now launched nationwide. Across the M-Pesa footprint,
we have over 200,000 active agents and M-Pesa processed 2.8 billion
transactions (up 27% year-on-year). The service is expected to deliver
a growing proportion of our emerging market revenue over the next few
years. Besides providing additional revenue streams, M-Pesa also keeps
customers on our networks, which reduces the proportion of customers
that leave, commonly known as churn.
We continue to innovate M-Pesa, with the introduction of services such
as Lipa Na M-Pesa, a retail payment proposition for consumers, and the
expansion of international money transfer propositions. In March 2014
we launched the service in our rst European market, Romania.
Context
a Our main emerging markets are India, South Africa, Turkey,
Egypt, Ghana, Kenya, Qatar, Tanzania and several other southern
African countries.
a They provide strong growth opportunities due to fast economic
growth, young and rising populations, and low and increasing
mobile penetration.
a The demand for mobile data in emerging markets is beginning
to take off, in part due to the lack of alternative xed
broadband infrastructure.
a There is signicant scope for newer revenue streams, such
as mobile money transfer as many people in these markets have
little or no access to banking services.
Where we are going
We are aiming to drive continued growth in emerging markets
through a differentiation-based strategy of being the “best”, by:
a increasing and enhancing our base stations sites to improve voice
and data quality and coverage;
a extending bre to enterprise customers to meet the expected
demand for unied communications services;
a expanding the branded store footprint to enhance customer
service; and
a expanding our leading money transfer service, M-Pesa. The goal
is for it to deliver a growing proportion of our emerging market
service revenue.
Vodafone Group Plc
Annual Report 2014
Vodafone Group Plc
Annual Report 20142626