Vodafone 2016 Annual Report Download - page 14

Context
a Customers are increasingly converging
or unifying communications by sharing
content between their xed and mobile
devices – phone, tablet, laptop or TV
a Television and content, when bundled
with broadband, are becoming
increasingly important drivers
of customer demand
a The growing demand for converged
services drives data usage, which in turn
requires the combination of mobile and
bre infrastructure
What we’re aiming for
a We expect xed revenue to continue
to gain in importance to us, driven
by convergence
a We are aiming to increase our market
share in xed from a low level today
a We seek to roll out more high-speed
bre or cable. We already reach
72 million households in Europe,
up from 41 million last year
a We’re aiming to expand our
TV services,to support the take
up of broadband. We already have
TV services in seven markets
Convergence
Connectivity and content,
wherever you are
In many of our markets, there is a growing
trend towards the convergence of xed
and mobile services (also known as unied
communications). This trend provides
many benets to both customers and
operators. For customers, there is the
convenience of a single bill, the likelihood
of lower overall prices compared to buying
services individually, and the potential
of enhancements to the service: using
your TV subscription on multiple mobile
devices as well as your big screen at home,
for example.
For the provider, there is an important network
benet from the combination of mobile and
bre infrastructure, which is increasingly
necessary as the volume of data continues
to grow strongly. The bundling of services
also increases customer loyalty and provides
opportunities to sell additional services
or sign-up more members of a household.
We have transformed our presence
in converged or unied communications
in the last four years, particularly in Europe.
With several signicant acquisitions, capital
investment in bre networks and strong
growth in customers, we are now a major
player in high speed xed broadband. With the
ability to market bre and cable broadband
services to 72 million homes in Europe,
41% of these on our own next-generation
networks, our reach is very broad.
We achieved organic service revenue growth
of 3.5% in xed line during the year, and 26%
of all our European service revenue now
comes from the provision of xed line and
TV. Our broadband customer base grew 11%
year-on-year to 13 million – with 48% of these
customers taking high speed services on bre
or cable. The launch of broadband in the
UK during 2015 means we now provide xed
services in most of our European countries,
as well as signicant growth markets such
as Turkey and Egypt.
In February 2016 we made another important
strategic move with the announcement of our
intention to form a 50:50 joint venture in the
Netherlands, combining our strong mobile
business with Ziggo, the cable operator owned
by Liberty Global. This will create a business
with 99% 4G coverage and over 90% cable
footprint in one of our key European markets.
This combination enables us to provide
excellent converged services to customers,
compete head-to-head with the incumbent
operator, and realise synergies with a net
present value of €3.5 billion.
Television and content are becoming
increasingly important parts of our offering,
with customers often looking to buy as part
of a bundle with broadband. In the year
we launched TV services in Ireland and now
offer TV in seven markets. We have 9.5 million
TV customers, with 0.4 million added this year.
Television and content are becoming
increasingly important
Our goal is to ensure access to premium
content where our customers value it.
In several markets, incumbents have sought
to gain exclusive access to key content
rights. In this scenario we will compete
to secure access, which may increase our
costs. We will also encourage regulators
to prevent incumbents from using
content – in addition to their dominance
in xed access markets – as a lever
to reduce competition.
Chief Executive’s strategic review (continued)
Fixed broadband customers
million
2014
2015
2016
9.2
12.0
13.4
21%
of our service revenue comes from
xed services
Vodafone Group Plc
Annual Report 2016
12