Vodafone 2015 Annual Report Download - page 18

Project Spring
First communicated in detail in November
2013, Project Spring is our two-year, £19 billion
investment programme designed to place
Vodafone at the forefront of the growth
in mobile data and the increasing trend
towards the convergence of xed and mobile
services. The key elements of the Spring
infrastructure build are:
a building 4G to over 90% of the population
in our European markets and 3G to up to
95% of the population in targeted areas
of India;
a modernising our mobile network, with
high speed backhaul giving us the
capacity to provide a consistently good
network experience to our customers;
a making calls more reliable – still the
number one priority for most customers;
a upgrading our retail presence, to offer
customers modern shops focused
on service as well as sales;
a increasing our next-generation xed line
infrastructure in Spain, Italy and Portugal;
and
a enhancing our suite of Enterprise products
and services, and taking them into new
geographical areas.
We have made signicant progress on all
of these elements during the year, and are
on track to hit our key March 2016 targets.
Highlights of our progress include:
a extending our European 4G footprint
to 72% population coverage, up from 32%
in September 2013;
a adding a further 33,000 2G and 42,000 3G
sites, to deepen our existing coverage and
improve voice reliability;
a reaching 90% of the population
in targeted urban areas with 3G in India;
and
a covering an additional 3.9 million homes
across Europe with our own bre.
These investments have already seen the
customer experience improve signicantly,
with 88% of customers’ data sessions
in Europe now at 3 Mbps or better (the level
required to watch uninterrupted high-
denition video), and dropped call rates
in Europe falling by 34%.
Data
We have witnessed exceptional demand
for data this year, whether 4G in Europe
or 3G in emerging markets, with data growth
totalling 80% for the full year, and accelerating
every quarter in Europe. As video and music
services proliferate, and data coverage widens
and becomes more consistent, customers
are increasingly using their smartphones
and tablets for entertainment, work and
social interaction.
We now provide 4G services in 18 countries,
with a further four countries launched
during the year. Our 4G customer base has
quadrupled to 20.2 million. While progress
has been rapid, still only 13% of our
European customer base is on 4G, providing
us with a very substantial opportunity for
future growth.
With quicker network response times, better
in-building penetration and higher peak
speeds, 4G is stimulating signicant growth
in data, with usage typically doubling when
customers migrate from 3G to 4G. In addition,
our successful commercial approach
of bundling content packages with 4G
in a number of European markets is boosting
data consumption further, and enabling
us to introduce larger data bundles
to customers. Our ability to translate this
strong data demand into revenue growth will
be a key driver of our nancial performance
in the years ahead.
In emerging markets, the data story is equally
positive. In India, for example, we already have
19 million 3G customers (up from 7 million
a year ago), smartphone penetration in urban
areas is already 44%, and 3G data usage
per customer is at similar levels to Europe.
For many, their rst experience of the
internet will be on mobile, given the lack
of xed line infrastructure. Our rapid roll-out
of 3G networks this year is generating a rapid
payback, with 3G browsing revenues growing
at 140% during the year.
Unied communications
We are well on the way to becoming a full
service, integrated operator in our main
markets. Through organic investment
and acquisition, we now cover 28 million
households (and thousands of businesses)
across Europe with our own bre or cable
infrastructure. In addition, we can reach
a further 22 million households by accessing
the incumbent operators’ networks. In the
2015 nancial year, 25% of our service revenue
in Europe came from xed line, compared
to just 10% ve years ago. We now have
11.3 million broadband customers and
9.1 million TV customers in Europe.
During the year we completed the acquisition
of Ono, Spain’s number one cable operator
covering seven million homes. We made
strong progress on the integration of both Ono
and KDG in Germany, combining our xed and
mobile networks and beginning to migrate
Vodafone broadband customers to our
new infrastructure.
We are also demonstrating strong commercial
momentum. We increased our European
broadband customer base by over 850,000
(excluding acquisitions) during the year, with
revenue trends improving through the year.
In the coming weeks, we will launch our
consumer broadband proposition in the UK,
with TV to follow later in 2015, and as a result
will be offering integrated xed and mobile
services in all of our major European markets.
Chief Executive’s strategic review (continued)
Vodafone Group Plc
Annual Report 2015
16