Leaner and meaner; Vodafone offloads Softbank as tiers start flowing

UK-based operator Vodafone reported a year on year revenue growth of 3.9 per cent for the six months to the end of September, to reach £22.6bn. The company also slimmed down further by announcing plans to offload its remaining interests in Japanese operator Softbank for a cash boost of £3.1bn. This dates back to the 2006 sale of Vodafone KK.

The move comes as Vodafone Group refocuses on three regions: Europe, Africa and India and strives to become “a more valuable Vodafone,” with a winning growth strategy through mobile data, targeting the enterprise segment, emerging markets, convergence in Europe, and new services such as M2M.

As it tries to increase data revenues from mobile broadband access, Vodafone is now transitioning its data pricing plans to tiered plans and differentiated service levels, having experimented with this approach in Spain. This move will “encourage data adoption and adjust pricing to usage, thereby giving customers more control and driving better returns on our investment,” according to Vittorio Colao, Vodafone’s CEO.

“Growth will need to come from a leaner, more efficient organisation. That was our assessment of Vittorio Colao’s intentions when he became CEO and he looks to be following through on it,” said Ovum analyst Emeka Obiodu.

“Going forward, Vodafone now needs to find new growth opportunities. Its current M&A strategy is no longer hunter-centric. The stake in China Mobile has gone, the financial assets in Softbank Japan are going and even the Verizon Wireless and SFR stakes are not safe.

“The new strategic agenda, especially with the emphasis on data services, M2M, tiered data pricing, enterprise services and wholesale data (as seen in the Netherlands) are all designed to squeeze out more value from Vodafone’s existing assets,” Obiodu added.

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