Congrats Vodafone, but heed Groucho Marx

By Camille Mendler

It’s about time for a shakeup. And for a mere £1 billion (US$1.7 billion) in cash, Vodafone may pull it off.

If successful, its bid for Cable & Wireless Worldwide creates nothing less than a new top-tier player in the global enterprise telecoms market.

Not least, Vodafone’s move underscores a truth that mobile network operators in particular must confront: Consumer revenue growth is tapped out. The new frontier of monetizable opportunity is the enterprise.

Deal synergies

Vodafone, which currently serves 560 multinational customers and 34 million small enterprises worldwide, gains a powerful foothold in the FTSE 100 and UK government via C&WW. It gains a range of ICT skills and services, including a wider cloud computing portfolio.

Vodafone can also slash its UK and international service delivery costs with C&WW’s fiber connectivity and  global IP backbone. C&WW’s wholesale revenues are gravy on top.

But fresh meat for Vodafone’s enterprise mobility services is the tastiest morcel. Mobility is a leading ICT investment priority for large enterprises, according to Informa end-user surveys. Enterprises want to mobilize employees, applications, but also physical assets. Vodafone’s global M2M business – which manages more than 7 million M2M SIMs – can win out via the C&WW deal.

A cosy club

Although they cannot be accused of complacency, top-tier CSPs serving multinationals – AT&T, BT Global Services, Orange Business Services, Deutsche Telekom’s T-Systems and Verizon Business – have been a cosy club.

Global systems integrators such as Accenture, Fujitsu, HP and IBM are frequent competitors, but also CSP partners in some ICT bids.

Rival C&WW bidder Tata Communications, with its formidable submarine and datacenter holdings, shouldn’t be discounted in the long term. Nor should acquisitive NTT Group with its diverse IT and telecom assets and Telefonica’s rising global enterprise presence. Yet these CSPs have only caused a ripple, not a disruption.

Small is beautiful

Groucho Marx wisely said that he wouldn’t want to join any club that would have him for a member. Vodafone should take care as it effectively joins the top-tier club of CSPs targeting global enterprises. Crossing swords for multinational IP VPN and Carrier Ethernet deals is not the main event. Be wary of potential alliances. History is littered with disastrous marriages bearing pompous names, Unisource, Global One and Concert, to name a few.

Let’s hope Vodafone remains dead serious about small enterprises. They’re the customers multiplying and driving economic growth in many of Vodafone’s opcos. Vodafone gains a few thousand large enterprises in the short term. But among the millions of smaller enterprises in Africa, Asia and Europe are the next generation of multinationals that Vodafone should nurture and protect.