Vodafone 2015 Annual Report Download - page 36

External risk
3. Adverse political pressure
Risk description Assessment Mitigation
We face a range of political
pressures that could potentially
lead to adverse legislation
or regulation for the business.
For example, increased nancial
pressures on governments
may lead them to target foreign
investors for further licence fees,
directly impacting protability.
Furthermore, changes
in local or international tax
rules, for example prompted
by the OECD’s emerging
recommendations on Base
Erosion and Prot Shifting
(a global initiative to improve
the fairness and integrity of tax
systems), or new challenges
by tax or competition authorities,
may expose us to signicant
additional tax liabilities or impact
the carrying value of our deferred
tax assets, which would affect the
results of the business.
In all markets where we are
present, political decisions can
be made that can have
an adverse effect on our
business, in relation to a range
of issues, from retail price
regulation to access to next-
generation networks.
Additionally, disputes in regards
to the level of tax payable and
any related penalties could
be signicant, as reected in our
ongoing dispute in India.
a We monitor political developments in our existing and potential markets closely, identifying
risks in our current and proposed commercial propositions
a Regular reports are made to our Executive Committee on current political risks. These risks are
considered in our business planning process
a Authoritative and timely intervention is made at both national and international level in respect
of legislative, scal and regulatory proposals which we feel are disproportionate and not in the
interests of the Group
a We have regular dialogue with trade groups that represent network operators and other
industry bodies to understand underlying political pressures
a We maintain constructive but robust engagement with the tax authorities and relevant
government representatives, as well as active engagement with a wide range of international
companies and business organisations with similar issues
a Where appropriate we engage advisors and legal counsel to obtain opinions on tax legislation
and principles
Strategic risk
4. Convergence
Risk description Assessment Mitigation
We face competition from
providers who have the ability
to sell converged services
(combinations of xed line,
broadband, public Wi-Fi,
TV and mobile) on their
existing infrastructure which
we either cannot replicate
or cannot provide at a similar
price point potentially leading
to higher customer churn and/
or signicant downward pressure
on our prices.
Our own convergence
strategy may be compromised
if we are unable to obtain
regulated or equivalent access
to infrastructure and content,
or acquire, rent or build the
right assets, or if we are unable
to integrate effectively those
businesses we do acquire into our
existing operations.
This risk is more likely in mature
markets where more competitors
have the assets to offer
converged services.
a In key European and some non-European markets we are providing xed line
telecommunication services (voice and broadband)
a In all markets we actively look for opportunities to provide services beyond mobile through
organic investment, acquisition, partnerships, or joint ventures
a As part of Project Spring, we have increased investment in our next-generation xed
line infrastructure
a For all signicant transactions we develop and implement a structured integration plan,
led by a senior business leader
a Integration plans ensure that cost synergies and revenue benets are delivered and that the
acquired businesses are successfully integrated through the alignment of policies, processes
and systems
a Timely and coordinated intervention with regulatory and competition authorities
to ensure that dominant infrastructure access and content providers cannot discriminate
or restrict competition
Relative movement within Group principal risks:
Increased
Relative movement within Group principal risks:
Unchanged
Risk management (continued)
Vodafone Group Plc
Annual Report 2015
34