Socio-economic potential of mobile
Mobile technology can bring significant social andeconomic benefits. Vodafone makes a direct contributionto the global economy through the wealth we generate,the taxes we pay, the suppliers we support and the peoplewe employ. We also stimulate economic development bygiving wider access to communications that in turnextend access to finance, markets, education and healthservices. Our socio-economic impact (SIM) project isleading research in this area. We will use the findings toharness the potential of mobile for the benefit of societyand our business.
In brief:
• £11.7 billion cash value added• Top value-added per employee in telecommunicationssector in DTI Value Added Scoreboard 2005• Continued socio-economic impact project• Published study on potential of mobile to improvehealthcare
Economic value added
Vodafone contributes directly to countries in which it operates through licencefees, taxes, wages and purchasing products and services. Research suggests thatthe presence of mobile telecommunications in less developed countries promotesGDP and individual entrepreneurial opportunities. For example, a developingcountry with an extra 10 phones per 100 people between 1996 and 2003 wouldhave had GDP growth 0.59% higher than an otherwise identical country.
(1)
A standard measure of a company’s economic contribution is ‘cash value added’.This is the value of sales less the cost of bought-in materials, components andservices we buy from our suppliers. Vodafone added £11.7 billion to the globaleconomy in the 2006 financial year, compared with £17.5 billion the previous year.The UK Government Department of Trade and Industry’s Value AddedScoreboard 2005 ranked Vodafone third in the UK and seventh in Europe. Thecriteria for the scorecard differ to the cash value added measure, primarily asexcludes capital expenditure within the cost of goods and services. In the 2006financial year, our value added per employee rose to £268,000 compared with£258,00 in the 2005. The latest scoreboard is due to be published later in 2006.For more information, see www.innovation.gov.uk/value_added.In 2004, the GSM Association (of which Vodafone is a member) commissioned astudy
(2)
by the consultancy Ovum into the economic contribution of the mobileservices industry in the EU15 (the 15 members of the EU before enlargement).The study found that the industry generated €106 billion GDP in the EU15 in2004. That is equivalent to 1.1% of the total GDP, a larger contribution thanindustries such as mining and quarrying. In 2004, the industry directly employed423,000 people, who generated 2.5 times as much GDP as the average EU15worker. A further 1.3 million jobs depended on the industry indirectly and anadditional one million jobs depended on expenditure in the economy createdby the industry.In the UK in 2003, the mobile industry employed about 77,000 people directlyand created over 400,000 jobs directly and indirectly in the EU, according toanother study conducted by Ovum. In Spain, the contribution of mobiletelephony to GDP is around 2% and direct employment doubled from 2000to 2005, according to a study by Instituto de Empresa.
(3)
10Vodafone Group PlcCorporate Responsibility Report 2005/06
More information on the web:
•
The impact of mobile phones in Africa (full report)
•
The role of mobile phones in increasing accessibility and efficiencyin healthcare (full report)
vodafone.com/africavodafone.com/healthcarevodafone.com/responsibility/sim
(1)Waverman, Meschi and Fuss, The Impact of Telecoms on Economic Growth in Developing Countries,Africa: The Impact of Mobile Phones, Vodafone Policy Paper Series Number 2, 2005.(2)Lewin, The Economic Contribution of Mobile Services in the Europe Union Before its 2004 Expansion,Ovum, December 2005.(3)Becerra and Santaló, Efectos Economicos del Estancamiento en el Despliegue de la Infrastructuraen España (The economic effects of the blockage in network rollout in Spain), December 2003.
Advisory panel members for Vodafone’ssocio-economic studyDiane Coyle (chair)
Enlightenment Economics and University of Manchester
Allen Hammond
Vice President, Special Projects and Innovation,World Resources Institute
Marc Ivaldi
Professor of Economics, University of Toulouse
Alan Knott-Craig
Chief Executive Officer, Vodacom
Amanda Rowlatt
Director Europe Trade and International Financial InstitutionsDivision, UK Department for International Development
David Porteous
Director Bankable Frontier Associates LLC
Mostafa Terrab
Programme Manager, World Bank Information for Development Program
Leonard Waverman
Chair, Department of Economics, London Business School
Howard Williams
University of Strathclyde and Consultant to the World BankGlobal Information and Communication Technologies Policy Group
David Woolnough
Information and Communications for Development Advisor,UK Department for International Development
Direct economic value
Payment£bn
Shareholder returns9.3Procurement of goods and services25.9Tax1.9Retained for growth-2.1Salaries and bonuses2.1Returns to lenders0.4Value-added
Vodafone added £11.7 billion tothe global economy in the 2006financial year. Our value addedper employee was £268,000.
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