Vodafone 2016 Annual Report Download - page 26

Failure to deliver on convergence Movement from 2015: Increased
What is the risk?
We face competition from providers who have the ability to sell converged services (combinations of xed line, broadband, TV content and
mobile) on their existing infrastructure. If we fail to deliver converged services in key markets, due to inability to access infrastructure or content
at a reasonable price, this could potentially lead to higher customer churn and/or signicant downward pressure on our prices.
How could it impact us?
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 effectively integrate those businesses we do acquire into our existing operations.
Changes from 2015
The risk has slightly increased as regulation is failing to deliver a level playing eld across xed and content markets leading to potential
re-monopolisation by incumbent operators.
How do we manage it?
a We actively look for opportunities, in all markets, to provide services beyond mobile through organic investment, acquisition, partnerships,
or joint ventures. In key European and some non-European markets we are already providing converged services
a Timely and coordinated intervention with regulatory and competition authorities to ensure that dominant infrastructure access and content
providers cannot discriminate or restrict competition
a Integration plans ensure that cost synergies and revenue benets are delivered and acquired businesses are successfully integrated through
the alignment of policies, processes and systems
Adverse political measures Movement from 2015: Stable
What is the risk?
Vodafone operates under licence in most markets. Increased nancial pressures on governments may lead them to target foreign investors for
further licence fees or to charge unreasonably high prices to obtain or renew spectrum.
Similarly we could be exposed to additional liabilities if we faced a new challenge from tax or competition authorities or if local or international
tax laws were to change, for example as a result of the OECD’s recommendations on base erosion and prot shifting or the proposed EU tax and
nancial reporting Directives.
How could it impact us?
If we are not licensed to operate, we cannot serve our customers. If the cost of operations were to signicantly increase, directly or indirectly,
this would impact Vodafone’s protability and returns to shareholders.
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.
Changes from 2015
There have been no signicant changes over the last 12 months.
How do we manage it?
a We work with governments and regulators, nationally and internationally, to help shape any proposals that impact our business
a We maintain constructive but robust engagement with the tax authorities, relevant government representatives and non-governmental
organisations as well as active engagement with a wide range of international companies and business organisations with similar issues
a Where appropriate, we engage advisers and legal counsel to obtain opinions on tax legislation and principles
Vodafone Group Plc
Annual Report 2016
24
Risk management (continued)