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, has recorded profits for the first time. Vodafone Essar posted a 134% jump in operating profit to ?15 million for the 12 months ended March '11, compared with a loss of ?37 million during the corresponding period of the previous year, proof that underlying trends are turning positive in the world's fastest-growing mobile market. In another first, the telco recorded an operating-free cashflow of ?433 million for the 12 months ended March '11. Sales jumped 16% during the period to ?3,855 million. Revenues for the three months ended March '11 were up 17.2% to ?988 million compared with the quarter ended March '10.
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Vodafone does not give a quarterly profit figure for its Indian operations, which is the country's second-largest telco by revenues after Bharti Airtel. "Our performance in India has been driven by increasing voice penetration and a more stable pricing environment," Vodafone Group Chief Executive Vittorio Colao said in a statement. Earnings before interest, tax, depreciation and amortisation, or Ebitda, a key indicator of profitability, were up 15.1% to ?985 million for the year ended March '11, driven by the increase in customer base and economies of scale, which absorbed pricing and cost pressures, the company said. India also accounted for 80% of the 12.9 million customers Vodafone added globally during the three months ended March '11. Vodafone entered India in 2007 when it acquired an economic interest of 67% in the asset from Hutchison for $11.1 billion. Post this,Vodafone has invested an additional $7 billion in its Indian operations. Recently (March 2011), Vodafone said it would pay $5 billion in cash, a price fixed in 2007, for the Essar Group's one-third stake in its Indian JV ending months of conflict between the two partners and giving it complete ownership of the Indian entity. Last month, Colao had told ET that it plans to list its Indian operations by the year-end, if the company wins the $2.6 billion tax case over its $11.2 billion purchase of Hutchison Telecom's operations here in 2007. India's apex court is slated to hear Vodafone's appeal challenging the jurisdiction of the income tax department to impose capital gains tax on its 2007 deal on July 19. Vodafone Essar has been topping the customer addition charts for the last two months, finished 2011 fiscal with 135 million customers and had established clear leadership in attracting customers via the mobile number portability route, an upbeat Colao had added in the earlier interaction. But, a year ago, Vodafone's Indian arm was reeling from the savage tariff wars that had whiped out profits and revenues all telcos. While announcing its financials for year-ended March 10, Vodafone said it had cut the value of its its Indian arm by $3.2 billion (Rs 14,600 crore) because of a price war triggered by stiff competition and future payments for spectrum. While its India performance was upbeat, the British mobile phone giant's annual net profits slid by almost 8% on account of on a huge impairment charge in debt-ravaged nations across southern
Europe. Earnings after tax fell to ?7.97 billion in the year to March, compared with 2009/2010, while total sales rose 3.2% to ?45.88 billion.
Vodafone’s aggressive addition of mobile customers and a more stable pricing environment by the end of fiscal 2011 led to revenues of Vodafone India rising by 23.95 per cent to $6.16 billion for the fiscal year ended 31st March 2011 compared to $4.97 billion in the previous fiscal. The Chief Executive of the UK based operator Vodafone Vittorio Colao said in the annual results issued today said, “Our performance in India has been driven by increasing voice penetration and a more stable pricing environment.” He added that two main factors behind the margin decline in organic EBITDA of the company (which fell by 0.6 per centage points) were the adverse impact from higher recurring licence fee costs in India and the change in regional mix from the strong growth in India. Vodafone India’s EBITA stood at $1.59 billion and the EBITDA margin was at 25.6 per cent. Voice revenues rose to $4.93 billion while messaging revenues registered at $277.32 million and data revenues at $400.58 million while fixed line revenues were at $11.35 million. The operator had 134.57 million connections in India as of March 31, 2011, of which 95.3 per cent are pre-paid. The total annualised mobile customer churn for the quarter ended 31 March 2011 was 50.9%. The ARPU is now at Rs 171. Vodafone is currently piloting its mobile money transfer platform in India. The platform has over 20 million customers globally. The operator’s contact centre operations were consolidated into two major centres in Hobart and Mumbai, India. Cash capital expenditure decreased by $531.95 million primarily due to lower expenditure in India. Tax Case: Anticipated To Be $1B The latest development on the tax case faced by the operator in India is a stay by the Supreme Court. Through its subsidiary Euro Pacific Securities Ltd, Vodafone has sought a confirmation from the Authority for Advanced Rulings in India on whether withholding tax is due in respect of consideration payable on the acquisition of Essar Group’s offshore holding in VEL and the ruling is expected by the end of May 2011. The amount is anticipated to be approximately an additional $1 billion.
Vodafone Essar has continued its robust growth in India. Its telecom services revenue has gone up by 14% to Rs 23,200 crore in fiscal 2009-10 from Rs 20,400 crore in Fy 2008-09. The strong growth is despite being in a highly competitive market with 14 operators.
Wireless subcribers number crossed the 100 mn mark in Q4 FY 2009-10, with a total churn of 38.8% in Q4 FY 2009-10. Mobile services revenue growth was driven by the increase in the customer base with record net additions of 9.5 mn for the fourth quarter, partially offset by the ongoing competitive pressure on mobile voice pricing. Customer penetration in the Indian mobile market reached an estimated 50% as on March 31, 2010, representing an increase of 16.0% as compared to March 31, 2009. EBITDA grew by 9.2%, driven by the increased customer base and the 37.6% increase in the total mobile minute usage during the year with costs decreasing as a percentage of service revenue despite the pressure on pricing. India's service revenue increased by 13.7%. It is primarily driven by a 46.7% increase in the mobile customer base offset in part by a decline in mobile voice pricing.
Vodafone - 3
Spent £0.8 bn on capex last year as compared with £1.4 bn a year ago Mobile user churn–26% postpaid, and 40% prepaid To increase investments in new business areas like enterprise and carrier business
Network expansion also continued with the addition of 9,000 base stations by Indus Towers and an additional 16,000 by Vodafone Essar, making Indus Towers the world's largest tower company with over 1,00,000 towers under management. The awarding of six new national licenses, just a year after its entry into the market, also helped the operator's performance. However, the cherry on the cake for Vodafone this year was its managing to secure 3G spectrum in nine circles-comprising 60% of the operator's subscriber base-for Rs 11,617 crore. Vodafone also had plans for leveraging BWA spectrum for better data services, but failed to win any slots in the BWA auctions, exiting when the bidding price became unaffordable. It is the first operator to announce its launch of the Apple iPhone 4 in India in September this year. Vodafone in the UK had earlier sold 50,000 iPhones in the first twenty-four hours itself. In December 2009, the Vodafone Group acquired 49% interest in each of the two companies that hold indirect equity interests in Vodafone Essar following the partial exercise of options. As a result, the Group increased its aggregate direct and indirect equity interest in Vodafone India from 51.58% to 57.59%.
We continue to invest in equipment and technology CMO, Vodafone Essar, Kumar Ramanathan IPL, ZooZoo campaigns and cheaper handsets.... please share some success strategies that helped you stay ahead in the last year? At Vodafone, we place customers at the heart of everything we do. Our brand identity, 'Power to you' expresses our desire to offer better choices and empower our customers with unique advantages. One of the key aspects of our business approach this year has been to
sharply segment our customer offerings and deliver differentiated products and services to be relevant. We employed high-end business analytics to identify homogenous customer segments and then created a product and distribution strategy to meet the requirement effectively. This approach has borne results and Vodafone has increased its revenue market share this year. We recently launched ultra low cost handsets priced at just about Rs 800 to increase accessibility of mobile technology for millions of people who were so far unable to get connected owing to the handset price barrier. What are your expansion plans for the coming year? Vodafone has increased its market share to consolidate its position in India as the second largest operator in terms of revenue. We have also crossed the landmark of 100 mn subscribers in the country. Over the past three years, we have invested over Rs 20,000 crore to expand operations and help serve our customers better in India. We rely on our global and Indian experience to deliver the best products and services to our customers. With a distribution reach of about 1.2 mn outlets, we are well geared to serve customers in the remotest corners of India. In addition to voice and text, Vodafone will also work on investing in products and services that drive access to various data offerings. We will also continue to increase investments in new business areas like enterprise and carrier business. What were your customer centric strategies? With 'mass customization' as our mantra, we introduced a bouquet of products and services tailored specifically to suit the varied usage patterns of our customers. Our tariff plans are developed based on a deep understanding of our customers' needs, so that we can offer them better choices and empower them with optimum value. For example, we introduced campus packs for our young customers in colleges, and region specific plans were designed to provide customers with unique benefits at economical rates, free SMS offers, etc. The key is to be distinctive and unique, yet unrelenting in 'delivering value' across the spectrum of customers. Hence, there is no silver bullet that can be an answer. Is competition driving down pricing ? With too many players, the market has become hyper-competitive and is driving down pricing to unsustainable levels. This is not in the long term interest of the category. At the same time, a spectrum constrained scenario means higher investment in infrastructure which will also have its impact on consumer pricing. It is necessary to recognize and address these challenges. There has been a lot of consumer complaints of late with regard to call drops and fluctuating network coverage... Network quality is a moving target and Vodafone continues to invest in equipment and technology to provide optimal coverage in this spectrum constrained scenario. We are happy that all our internal measures of customer delight continue to rank us ahead of our competitors on customer advocacy. What are your new plans for 3G? We are delighted to have secured 3G spectrum in nine high value circles covering over 60% of our current customer base. We feel that we have already secured a critical strategic footprint across the country, particularly in the markets where we expect the main demand for 3G services in the next few years. Our aim is to launch the services soon after spectrum is provided by the government.
Vodafone has continued to grow with its multitude of offerings. Vodafone Essar also launched its first mobile applications store in March this year, which saw over 10,000 downloads in the first few days itself. In April, Vodafone also launched unlimited GPRS browsing for its customers in Karnataka at Rs 95
a month, and in the same month also signed a deal with Aegis Srinagar BPO to handle its call traffic, offering hundreds of Kashmiris working in Delhi and NCR a chance to return home. Besides this, the operator's ZooZoo IPL campaign earlier this year was another winner, which proved a huge success in terms of revenue for the operator. Vodafone also donated $1 mn to the World Wide Web foundation-a non-profit organization to enhance web education. The company also recently tied up with BlackBerry and RIM to launch the E-UNO R10 healthcare solution on a Vodafone services delivery platform for the prevention of heart attacks. The operator plans to return to low levels of organic revenue growth during FY 2011, and the growth in India and Africa is expected to continue. Vodafone Essar is known for quality value added services. The industry is watching for Vodafone's 3G strategies. In 3G, it will be one of the leading players.
IDG News Service — Vodafone (VOD) ended on Friday a fractious relationship with its Indian joint venture partner, Essar Group, but will end up paying more than earlier planned for the partner's 33 percent stake in the mobile joint venture, Vodafone Essar. The British company said that through the deal it struck with Essar Group, it will have a total cash outflow of US$5.46 billion, higher than the $5 billion it had planned in March when it announced that it was acquiring the stake. The payment includes a withholding tax of $880 million payable to India's Income Tax Department. "Whilst Vodafone and Essar continue to believe that no tax is due on this transfer, it was viewed as prudent to pay withholding tax on a without prejudice basis," the company said on Friday. Vodafone is already locked in a dispute with local tax authorities for not withholding tax before paying $11 billion to Hutchison Telecommunications International when acquiring a 67 percent stake, both directly and indirectly through Indian partners, in the joint venture in 2007. The company holds that no tax is payable as the deal was executed abroad by two foreign companies, but the Income Tax authorities maintain that the asset was owned in India. India's income tax rules require that tax should be deducted before a payment is made to a foreign company or nonresident for assets in India. Vodafone already directly holds 42 percent of the equity in the joint venture. To ensure that its stake stays within the maximum 74 percent limit allowed by the Indian government for foreign holdings in telecommunication service companies, 1.35 percent of the shares in Vodafone Essar will be transferred to an Indian investor, the company said on Friday. Under an agreement between Vodafone and Essar signed in 2007, Essar had an option to sell its 33 percent share in Vodafone Essar to Vodafone for $5 billion, or an option to sell between $1 billion and $5 billion worth of Vodafone Essar shares to Vodafone at an independently appraised fair-market trading value. Essar however at one point moved to merge one of the group companies that had a stake in Vodafone Essar with a listed group company to determine the true market value of its stake. Vodafone's investment in India has run into rough times. The company took a £2.3 billion (US$3.3 billion) charge for the Indian operation in May last year, citing "intense price
competition." The company also faces the $2.5 billion bill from India's Income Tax department for the deal with Hutchison.
. Complementary strenghts of Vodafone & Hutch esaar . The brand name it has in the indian market . The kind of subscriber bas it has in the indian market . It has the 2nd higest market share in India(source : wikkipedia) . It has a 2nd higest subscriber base in inda 1st being airtel . Its strong advertising startiges and impact on people . Its Indias 3rd biggest mobile carrier(source: Business standard)
. Low R&D . Ubiquitiouegory, products, services . High customer churn (33.33%) . Rural India unable to relate to the brand . Poor network coverage
.Emerging markets and expansion abroad . Innovation .Product and services expansion . Growing data business and 3G auctioning Threats . VAS as a means to increase ARPU (big boss, Zoo Z00) . Growing Enterprise solution market (10.2% in 2009 anticipated) . Large capital can be raised by listing Vodafone on Indian Stock Exchange(IPO) . Tower sharing business with Indus Towers
A Multi-National Company named Vodafone is one the leading companies in Telecommunication Industry. To determine the factor that became their key to success is a good implication that all the company can be as successful as Vodafone, although they engaged in different kind of industry. The study also includes the company’s brief history, vision, and different challenges that leads the company in making formulas to trap the success on their side. History Vodafone was formed in 1984 as a subsidiary of Racal Electronics Plc. Then known as Racal Telecom Limited, approximately 20% of the company's capital was offered to the public in October 1988. It was fully demerged from Racal Electronics
Plc and became an independent company in September 1991, at which time it changed its name to Vodafone Group Plc. It also merged with AirTouch Communications, Inc. (‘AirTouch’), the company changed its name to Vodafone AirTouch Plc, following the approval by the shareholders in General Meeting, reverted to its former name, Vodafone Group Plc. Vision Our vision is to lead the industry in responding to public concerns regarding mobile phones, masts and health by demonstrating leading edge practices and encouraging others to follow. Company Strategy Review In May 2006, the company formulated a five point strategy which served well for more than two years. And broadly maintained or improved share against our largest or reference competitors in most of our markets and delivered on our key cost targets. They increased the share in revenue successfully increased the exposure to higher growth markets. However, a number of challenges have evolved. Elasticity on core voice and messaging services remains below one, competitive and regulatory pressures continue to be strong, and meeting the expectations in some market is hardly attainable. Those factors which affects the continuous growth of the company, undergone into on-going company strategy review. PEST Analysis Political – political factors involved the tax policy, labor law, environmental law, trade restrictions, tariff, and political stability. Due to the customer relationships that the company value most, Vodafone is willing to shift their approach away from unit pricing and unit based tariffs to propositions that deliver much more value to customers in return for greater commitment, incremental penetration of the account or more balanced commercial costs. This will require a more disciplined approach to commercial costs to ensure our investment is focused on those customers with higher lifetime value. In essence, we are confident that by targeting our offers, we can deliver more value to our customers and have a better financial outcome for Vodafone. Economic – economic factors includes the economic growth, interest rates, exchange rates and the inflation rate. The pricing factors the company usually do is giving the consumers a right and justly cost so that, everybody can avail or purchase their product in a broad sense.
Social – social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. The need for an equipment that can be a good device for every age range is available, since everybody are fully oriented in the use of the mobile technologies. Technological – technological factors includes ecological and environmental aspects, like R&D (Research and Development) activity, automation, technology incentives and the rate of technological change. The technology is the thing that Vodafone is very proud of. The technological advancement enables the company to make a customer relationships stronger because of their customers trust that built over the years. The PEST factors have major impacts on how businesses operate and make decisions. With the help of PEST analysis, the business can penetrate to the market with readiness. The determination of its four keys, the business will answer the common questions that revolve around the business society. These basic questions are what to produce, how to produce, when to produce and for whom to produce. No matter how many times a business answer these questions, the needs from the market will remain constant and unchanged. It is an advantage of the company to know the scope and limitation of their business. It is done so that the company is prepared enough to face a future and ready to give solutions as possible when the demand for the products are satiated or already diminished. SWOT Analysis Strengths – The Company’s strengths can be the reputation of the business in the local market because of the product in long run. The company’s strengths are the strong bond of the company towards the customer and valuing them most as they craft another product. Another strength that can be depicted is the technology that is their greatest asset above the competitors. Weaknesses – The result of the weaknesses can be shortage of materials needed or more expensive purchase of materials in the target country. Meeting the customers’ demand is sometimes hard to cope. Every company must admit that reaching the customers’ taste and preferences are really hard to achieve. But this weaknesses will serve as a challenge in the company and they must prepare actions in answering this needs.
Opportunities – The opportunities can be a well established position when the business successfully landed in the foreign market. On growth opportunities, the three target areas are Mobile data, Enterprise and Broadband Threats – The threats can be large competitors that are waiting for the business that were undiscovered before conducting the study. This possibility is not that new. The Vodafone is not the only company that serving a kind of delicacy. Some companies might surpass their achievement, and therefore, they must maintain their company culture in dealing with their customers and being ahead in the products and services. The threats will not mean bankruptcy, but it can be a contributing factor in the bankruptcy of the company. The SWOT analysis is a tool that assesses the company in its position in the market, or commercial viability. The method of sales distribution with the accordance to brand or product, business idea, strategic option, such as entering a new market or launching a new product, opportunity to make an acquisition, potential partnership, changing a supplier, outsourcing a service, activity or resource, and investment opportunity, in short, SWOT measures a business unit, a proposition or idea. Key to Success The foundation of every company to reach the success is how effective the research made and the continuous development in it. The further innovation is another great factor. The service of Vodafone towards its customers can generate a strong cash flow, based on the high-demand on their communication products. A greater range of data devices and portable computers, at increasingly lower costs, are enlarging the addressable market. On the cash cost side, only about a third of operating costs are fixed, and about a quarter depend on growth in voice minutes and data traffic. Vodafone has three key attributes which strongly differentiate from the competitors: firstly, the scale in technology with which we continue to drive network and IT savings through consolidation and centralization of core activities; secondly, the strong presence in the enterprise market, in large corporate as well as in small and medium sized businesses; and finally, the brand, especially in consumer pull markets. The Vodafone’s strategy is focused on four key objectives: drive operational performance, pursue growth opportunities in total communications, execute in emerging markets and strengthen capital discipline. Conclusion
The fast growth of the company doesn’t depend on its strong cash flow but also affected by the assurance of the company’s customers loyalty. The exposure of the products in the market eye is a great help in earning the customer’s trust. The proper use and taking the chance of innovation considers a fifty-percent risky and the other half is fifty-percent successful. But in doing a business, the company must keep into their mind that it is better to lose a little in the income in trying to make a difference than to lose all because of doing nothing.
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