Vodafone 2014 Annual Report Download - page 49

Annual Report 2014 47Overview
Strategy
review Performance Governance Financials
Additional
information
Key risks Mitigating factors
Network or IT systems failure
Major failure or malicious attack on our network or IT systems may result
in service interruption and consequential customer and revenue loss.
Specic back-up and resilience requirements are built into our networks
combined with regularly tested business continuity and disaster
recovery plans.
Failure to protect customer information
We host increasing quantities and types of customer data in both
enterprise and consumer segments and any failure to protect data
adequately could affect our reputation and lead to legalaction.
Hardware and software applications include security features which are
reviewed by our technology and corporate security functions to ensure
compliance with our policies and security standards.
Competition
We face intensifying competition where all operators are looking to
secure a share of the potential customer base, leading to lower future
revenues and protability.
We will continue to promote our differentiated propositions by focusing
on our points of strength such as network quality, products and
customer service. See page 21 for more details on our strategy.
Regulation
We need to comply with an extensive range of regulatory requirements
including the licensing, construction and operation of our networks and
services that can lead to adverse impacts on our business.
We monitor market developments closely, identifying risks in our
current and proposed commercial propositions, which are factored
into our business planning process, competitive commercial pricing
and product strategies. We also make interventions at a national
and international level in respect of legislative, scal and regulatory
proposals which we feel are not in the interest of the Group.
Converged and over-the-top “OTT” services
Some competitors offer converged services which we cannot either
replicate or provide at a similar price point. Furthermore, advances in
smartphone technology place more focus on applications, operating
systems and devices rather than the services provided by operators,
which could erode revenues.
In some markets we already provide xed line services whilst in others
we actively look to provide such services through acquisition or
partnerships. We have also accelerated the introduction of integrated
price plans to reduce customers’ out-of-bundle usage through
substitution. See pages 22 to 25 for more details.
Weak economic conditions
Economic conditions in many markets, especially in Europe, continue
to stagnate or show nominal levels of growth and remain impacted by
austerity measures which could affect disposable incomes. This may
result in customers moving to lower price plans or giving up theirphones.
We monitor the economic situation and have developed plans with
specic actions identied to mitigate the risk of a market entering a
period of severe nancial crisis.
Health risks
Concerns have been expressed that the electromagnetic signals
emitted by mobile handsets and base stations may pose health risks.
Authorities including the World Health Organization (‘WHO’) agree there
is no evidence that convinces experts that exposure to radiofrequency
elds from mobile devices and base stations operated within guideline
limits has any adverse health effects.
We have a global health and safety policy that includes standards for
radio frequency elds that are mandated in all our operating companies.
We monitor scientic developments and engage with relevant bodies
to support the delivery and transparent communication of the scientic
research agenda set by the WHO.
Integration of acquired businesses
The price paid for acquired businesses is based upon current and future
expected cash ows that are expected to be generated from benets
and synergies that being part of the Vodafone Group will generate.
We have experience of acquiring and integrating businesses into the
Group and for all signicant transactions we develop and implement
a structured integration plan to ensure that revenue benets and cost
synergies are delivered.
Key suppliers
We depend on a limited number of suppliers for strategically important
network and IT infrastructure and associated support services to
operate and upgrade our networks and provide key services to
ourcustomers.
We periodically review the performance of key suppliers across
individual markets and from a Group perspective, including identifying
and managing “suppliers at risk” and having business continuity plans in
place in case of supplier failure.
Tax disputes
We operate in many jurisdictions around the world and from time to
time have disputes on the amount of tax due, including an ongoing tax
case in India where the Indian Government has introduced retrospective
legislation that overturns a positive India Supreme Court decision.
We maintain constructive engagement with the tax authorities, relevant
government representatives and other businesses with similar issues.
We also engage advisors and legal counsel to obtain opinions on tax
legislation and principles.
Impairment assumptions
Revisions to the assumptions used in assessing the recoverability
of goodwill, including discount rates, estimated future cash ows or
anticipated changes in operations, could lead to the impairment of
certain Group assets.
We review for impairment at least annually and consider the
appropriateness of assumptions used including discount rates and long-
term growth rates, future technological developments and the timing
and amount of future capital expenditure.