The Success Story of Vodafone

Since its entry into India in 2007, Vodafone has established itself as a trusted mobile service provider in the country. After the launch of Reliance Jio, the company is facing tough competition in India, and some are even speculating the shut down of the company in India. Besides India, Vodafone has its operations in over 30 countries worldwide, and despite its ups and downs, Vodafone has managed to hold a significant share of the telecommunications market in many countries across the world. Vodafone is yet another example of a business that started small and went on to make a mark worldwide. Here is how Vodafone started and rose to become a leading player in the global telecommunication sector.

Vodafone - Company Highlights

  • Startup Name-Vodafone Group Plc
  • Predecessors-Racal Telecom (1981–1991), Voda-Racal Telecom (1985–1991)
  • Headquarters-Newbury, Berkshire, England, UK
  • Industry-Telecommunications
  • Founders-Ernest Harrison, and Gerry Whent
  • Founded-16 September 1985
  • Areas Served-Worldwide
  • Current CEO-Nick Read

About Vodafone Group

Racal Strategic Radio Ltd, a component of Racal Electronics, Britain's biggest manufacturer of military radio equipment, launched a joint enterprise with American telecommunications company Millicom in 1981, which evolved into the modern Vodafone.

Today Vodafone provides a wide range of products and services for consumers, businesses, and Governments.  Besides mobile services, Vodafone offers fixed broadband and television services, cloud and hosting, internet protocol-virtual private network services, roaming, and unified communications services.

Vodafone's M-Pesa is a mobile financial and mobile payment service that allows customers to access their bank accounts to receive or send money, purchase stuff, make bill-payments, save funds, and get simple loans; and Vodafone One Net is a converged fixed and mobile communications service for big multinational companies as well as small and medium enterprises.

Vodafone also provides machine-to-machine services, as well as tablets,  smartphones, and telematics commodities/services. It has roughly 16,000 retail locations, distributors, and third-party merchants selling its products.

Vodafone - Latest News

Vodafone's first-quarter revenue for FY2021-22 increased by 1.4 percent in Germany which is its biggest market. In the UK, as international travel reopened, the telecoms behemoth benefited from visitors to the UK utilizing its network. A marginal increase in Vodafone's revenue also came as it levied roaming fees as a result of the UK's withdrawal from the EU. Overall, the Vodafone group made revenue worth $51.169B in FY 2020-21 which is 2.32% more than in FY 2019-2020 revenue.

Since the pandemic, Vodafone has experienced a resurgence in mobile phone sales, with greater customer loyalty across Europe, according to the company.

Vodafone - Industry

Companies in the telecommunications sector make communication possible on a worldwide scale, whether it's through the internet or phone, over waves or wires, or digitally. These businesses built the infrastructure that allows data to be transferred anywhere in the globe in the form of text, speech, audio, or video. Telephone (both landline and wireless) operators, satellite companies, cable companies, and Internet service providers are the main corporations in the industry.

Telecommunications has grown in importance as a fundamental business, which speaks well for its prospects for the future and expansion. Continuous advancements in high-speed mobile networks and Network connectivity across devices continue to fuel industry invention and rivalry. Most of the industry's attention is focused on delivering quicker data solutions, particularly in the field of high-resolution video. The driving causes are essentially faster and crisper services, improved connection, and multi-app utilization.

Vodafone - Name, Logo, and Tagline

Vodafone is an acronym for VOice DAta FONE (a dramatic spelling of "phone"), which was selected by the firm to "represent the availability of telecommunication services through mobiles."

Saatchi & Saatchi, a well-known worldwide advertising business, created the Vodafone logo in 1997. Conversation and voice communication is represented by the apostrophe in the logo. It brilliantly delivers a classic telecom brand that conveys its intended message in an aesthetically attractive manner.

Vodafone's tagline says, "Together We Can."

Vodafone - CEO and Founders

Vodafone was founded by Ernest Harrison and Gerry Whent in 1985.

Ernest Harrison

Sir Ernest Thomas Harrison OBE (11 May 1926 – 16 February 2009) was a British entrepreneur who was best known for being the first chairman of Racal's spin-off mobile phone section, Vodafone.

Gerry Whent

Sir Gerald Arthur "Gerry" Whent CBE was the founder and first CEO of Vodafone. He was born on March 1, 1927, in Ferozepore, India, and died on May 16, 2002, in Chilton Foliat, Wiltshire.

Nick Read

Nicholas Jonathan Read aka Nick Read is the current CEO of Vodafone group. Born in 1964, Nick is a Certified Management Accountant. Prior to joining the Vodafone group, Nick worked for United Business Media Plc and Federal Express Worldwide. At Federal Express Worldwide, Nick worked as the Chief Finacial Officer for Europe, the Middle East, and the Africa region.

Nick joined Vodafone UK as the finance director in the year 2001 and became the CEO of the Vodafone group in 2018.

Ravinder Takkar

In India, Ravinder Takkar is the MD & CEO of  Vodafone-Idea. He was the Ex- CEO of Vodafone Romania.

Vodafone - Startup Story

Based in Newbury in the United Kingdom, Vodafone has been offering its services since 1985. Vodafone's story dates back to 1981. British Electronics company Racal Electronics and American company Millicom Inc joined hands to bid jointly for UK's second cellular radio license.  The joint venture between the two companies was named Racal-Millicom Ltd. In December 1982, Racal-Millicom Ltd. was successful in earning the second Mobile phone network license of the UK.

The Network was named Vodafone as the network lets its users transfer voice and data over the mobile phones. Racal-Vodafone (Holdings) Ltd became the holding company of Vodafone replacing Racal-Millicom Ltd. Racal held the majority shares in Racal-Vodafone (Holdings) Ltd. Meanwhile, Racal's radio division earlier called Racal Strategic Radio was renamed Racal Telecommunication group limited.

In December 1986, Racal Electronics bought the entire shares of Vodafone from the minority shareholders, and thus Racal became the sole owner of the Vodafone brand.

In September 1988, Racal Telecommunication group limited was renamed Racal Telecom. In October 1988, when Racal Telecom went public, it came out that Racal Telecom was valued much more than its parent company Racal Electronics. This led to the de-merger of Racal Telecom from Racal Electronics, and Racal Telecom was renamed again as the Vodafone Group. Gerry Whent became the first CEO of Vodafone Group.

Vodafone - Mission and Vision

Vodafone's mission statement says, “To connect for a better future and our expertise and scale gives us a unique opportunity to drive positive change for society.”

Vodafone's vision is, "To be the communications leader in an increasingly connected world and to enrich our customer's lives through the unique power of mobile communication."

Vodafone - India

Vodafone India (previously Vodafone Essar Ltd, Huchison Essar Ltd) is the Indian subsidiary of the UK-based Vodafone Group plc and a telecommunications service provider in India, having its operating headquarters in Mumbai. Vodafone India has a market share of 21% as of March 2018, and after merging with Idea, the Vodafone Idea network now has around 375 million members, making it India's third-biggest cellular mobile provider.

The advent of Jio in the Indian telecom business in 2016 prompted a flurry of mergers and corporate restructuring. In March 2017, it was reported that Idea Cellular and Vodafone India will be consolidated. In July 2018, the Department of Telecommunications approved the merger. The Vodafone-Idea merger received final approval from the National Company Law Tribunal on August 30, 2018. On August 31, 2018, the merger was finalized, and the newly formed company was named Vodafone Idea Limited.

As per September 2021 data, Vodafone Idea Limited is the third-largest mobile communication network in India on the basis of the number of subscribers. The Vodafone Group owns 45.2 percent of the merged firm, the Aditya Birla Group owns 26 percent, and the remaining shares are held by the general public.

Vodafone - Products and Services

Vodafone is well known as a mobile service provider, but there are many more categories that Vodafone has entered into. Vodafone offers broadband and wifi services. Another popular service is Vodafone TV. Vodafone TV has been designed to offer an all-round entertainment option to the viewers. On Vodafone TV, viewers can access live TV, Video on Demand and can also access platforms like Netflix and Amazon Prime Video. Vodafone TV comes with attractive features like Ultra HD picture quality, intelligent voice search and smart replay of games, etc.

Vodafone released Vodafone 360, a new internet provider for mobile, PC, and Mac, in October 2009. After low hardware sales, this was canceled in December 2011. This followed the resignation of the Director of Internet Services in September 2010, who tweeted, "5 days until I leave Vodafone, freedom beckons." Vodafone launched, Vodafone 150, which is the world's cheapest mobile phone, in February 2010. Vodafone intended to sell 'Vodafone 150' for less than $15 (£10) in underdeveloped countries. It began in India, Turkey, and eight African countries, including Lesotho, Kenya, and Ghana.

Some other services offered by Vodafone are -

Payment through mobile phone - Safaricom, Kenya's biggest mobile communication operator and a Vodafone joint venture, released Vodafone-developed digital payments software in March 2007. M-PESA, Kenya's mobile money transfer service, had 1.6 million users by February 2008. By 2011, there were fourteen million M-Pesa accounts, with 40% of the country's savings saved in them. Vodafone launched a global collaboration with Visa in February 2012.

Health Services - Vodafone launched a newly developing market sector in November 2009 (the application of mobile communications and network technologies to healthcare). Several of its early accomplishments is the Novartis-led "SMS for Life" project in Tanzania, for which Vodafone designed and developed a message-based system that allows all of Tanzania's 4,600 public healthcare facilities to report their levels of anti-malarial medications so that accurate inventory data can be seen centrally in legitimately, allowing for quick and efficient re-supply of stock.

Vodafone Foundation - With the tagline "Connecting for Good," the Vodafone Foundation is a well-known charity that supports and initiates programs that employ mobile technology as a means to assist the needy. They frequently collaborate with other philanthropic organizations.

Vodafone - Business Model and Revenue Model

Various economic variables have an influence on the industry's enterprises, including high infrastructure costs, price wars in various market forces, and enmeshed mobile telephony sector, and government restrictions. Government laws, such as the recent Vodafone-Hutch transaction, which the Indian government sanctioned for tax evasion. Vodafone uses a mix of segmentation tactics to divide its mobile network services, enterprise services, and internet services. It makes use of geographic, demographic, and psychographic segmentation.

Coming to Vodafone's revenue model,  a huge chunk of Vodafone's revenue comes from selling mobile data, voice, financial services, and messaging services to individual and enterprise customers. Vodafone also makes money by offering various other services like cloud and hosting, cyber security solutions, remote working solutions, IoT related services and more to the enterprise customers. As per 2019- 20 reports, the company is aiming to diversify its revenue streams further in segments like financial services, IoT, digital services and enterprise.

As per some reports, Vodafone's mobile networks, which allow consumers to call, text, and download files, account for about 70% of its revenues and even more of its earnings. Fixed-line services, which include internet, TV, and voice, make for the majority of the remaining revenue.

Vodafone - Competitors

Vodafone's top global competitors are :  AT&T, BT, Orange, Telefonica, Deutsche Telekom, Telstra, Tata Communications, Nippon Telegraph and Telephone Corporation, Liberty Global and Telefonica Colombia.

Vodafone's top competitors in India are Bhart Airtel, Reliance Jio, Tata Communications, etc.

Vodafone - Challenges Faced

Vodafone's business will almost certainly continue to be hampered by tough regulatory frameworks and adverse demographic trends in its major European countries, particularly in Spain and Italy, which account for over 25% of revenues and have some of the weaker fundamentals.

Meanwhile, Vodafone's capital allocation history does not bode well for the company's M&A (Merger & Acquisition)plan. Since 2009, Vodafone has incurred more than $50 billion in impairment charges, which reflect the fact that an acquired asset is currently worth less than what Vodafone paid for it.

Vodafone is one of the major telecommunications businesses in the world, having a strong presence in its main European countries. However, due to its increased fragmentation and fewer business-friendly authorities, this is a challenging region to compete in when compared to America.

In light of Vodafone's need to continue deleveraging and invest substantially in 5G, cautious income investors may choose to avoid the stock in favor of more stable telecom companies like Verizon (VZ), which have more obvious routes to profitable long-term development.

In India, Vodafone is burdened by huge dues. In total Vodafone Idea has total debt of ₹1.92 trillion, which includes AGR dues, Spectrum-related dues, and bank loans. Stiff competition from reliance JIO is another major challenge Vodafone (Currently Vodafone Idea) is facing in India.

Vodafone - Future Plans

In the March quarter, Vodafone Idea recorded a net loss of Rs 7,022 crore and net debt of Rs 1.7 lakh crore.

"Financial performance has impacted its ability to generate the cash flow that it needs to settle/refinance its liabilities and guarantees as they fall due," the company said, "which, combined with its financial condition, is resulting in material uncertainty that casts significant doubt on the Company's ability to make the payments mentioned therein and continue as a going concern."

Vodafone Idea stated in a statement that it is undertaking 5G testing in the cities of Pune and Gandhinagar, utilizing spectrum authorized by the government.

With its equipment partners in Gandhinagar and Pune, the telecom claimed to have reached peak download rates of 1.5 Gbps utilizing the 3.5 GHz spectrum.

Jagbir Singh, CTO at Vodafone Idea, said, “We are pleased with the speed and latency results in the initial stages of the 5G trials on the government allocated 5G spectrum bands. Having established a robust 4G network pan-India, delivering fastest 4G speeds and a 5G-ready network, we are now testing the next generation 5G technology to be able to bring a truly digital experience for enterprises and consumers in India, in the future.”

However, despite all its efforts, 'Vodafone Idea' is not in a good position in India. As expressed by Vodafone Group CEO Nick Read, the company has no plans to infuse fresh funds into the 'Vodafone-Idea' Venture.

In its fiscal Q4 and full 2021 earnings statement, Vodafone Group stated that it will focus on growing as "a new generation connectivity and digital services provider” for Europe and Africa.

The Covid 19 pandemic has proved yet again that connectivity and digital services are crucial to society and Vodafone Group is ready to grab the opportunities that the Covid situation has created in the field of connectivity and digitization.

As per Vodafone CEO Read, the company is targeting revenue growth and disciplined capital allocation. It is also working on bringing down operating costs by 20% across its European and central Units by the end of the financial year 2023.

Vodafone - FAQs

What does Vodafone do?

Vodafone (based in Newbury, the United Kingdom) is a telecommunication services firm that provides phone, text, and data services via mobile and fixed networks, as well as fixed broadband and television services, cloud and hosting, internet protocol-virtual private network services, roaming, and unified communications services.

Who founded Vodafone?

Vodafone was founded by Ernest Harrison and Gerry Whent in 1985.

When was Vodafone founded?

Vodafone was founded by Ernest Harrison and Gerry Whent in 1985.

How does Vodafone make money?

Vodafone's mobile networks, which allow consumers to call, text, and download files, account for about 70% of its revenues and even more of its earnings. Fixed-line services, which include internet, TV, and voice, make for the majority of the remaining revenue.

Which companies do Vodafone compete with?

Vodafone's top global competitors are :  AT&T, BT, Orange, Telefonica, Deutsche Telekom, Telstra, Tata Communications, Nippon Telegraph and Telephone Corporation, Liberty Global and Telefonica Colombia.

Vodafone's top competitors in India are Bhart Airtel, Reliance Jio, Tata Communications, etc.