My, how you’ve grown: Vodafone reaches 30

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Moving with the times – from the first UK mobile call to aiming to be a quad-play provider

Turning 30 can be a big deal. Popular culture dictates that this is the age you should start worrying about your career, finances and love life (that’s if you weren’t already).

Of course, things are slightly different for companies. Numbers matter, but they’re more interested in sales and profits than candles on the cake.

Nevertheless, the 30th anniversary of the Vodafone brand gave us the opportunity to take a look back on the company’s impact on the mobile market, its achievements to date and what the next few years have in store.

Vodafone has cause to celebrate. It is the oldest and most valuable mobile phone brand in the UK.

The Vodafone name was unveiled on March 22 1984, a year after its parent company Racal Electronics (a defence firm) won a licence to provide mobile services to the private sector. It was one of only two companies at the time to have such a licence – the other being Cellnet, which was rebranded in 2002 as O2 and sold to Spanish company Telefonica in 2005. The Orange and T-Mobile names date back to 1994 and 2002 respectively, while Three was launched in 2003.

The 30-year-old brand has been ranked consistently as the most valuable name in UK telecommunications by valuation consultancy Brand Finance. It is also the 16th most-valuable brand globally at present, with a valuation – which takes into account emotional connection, financial performance and sustainability – of $29.6 billion (£18 billion). EE is the only other UK operator to feature in the top 500; a new entrant at 242, the brand is valued at $5.3 billion (£3.2 billion).

Overshadowed
Vodafone reaches the big 3-0 as a company with huge global reach, with 411 million customers worldwide compared to Telefonica’s (O2) 323 million, France Telecom’s (Orange) 230 million and Deutsche Telecom’s (T-Mobile) 230 million – although the latter is expected to have 250 million by the end of the year.

In the UK, however, Vodafone has 19 million customers and is overshadowed by EE’s collective 27.5 million and O2’s 23 million (this includes M2M connections though). Only Three has fewer, with eight million active subscribers.

Vodafone has however just announced it will increase its number of UK stores from 354 to 504. This takes it comfortably over Three (350) and O2 (450) and much closer to EE, which has 570 stores, in terms of high-street presence.

When it comes to rolling out the latest technology, 4G, Vodafone was pipped to the post by EE, which took the initiative and asked Ofcom if it could use its existing resources to run the superfast service. This means that Vodafone turns 30 with more than 500,000 4G customers, while EE has hit the two million mark.

Acquisition drive
The 4G debacle is a blemish on Vodafone’s otherwise impressive history, which shows it to be a company capable of getting there first. For example, in 1985 the firm launched the first cellular network in the UK, and made the first mobile phone call in the UK, from St Katherine’s Dock to its offices in Newbury, on January 1 that year.

In 1991, Vodafone launched the first GSM mobile phone service in the UK, and a year later it signed the world’s first international GSM roaming agreement, with Telecom Finland.

Vodafone then went on an acquisition drive at the turn of the century, buying US wireless provider AirTouch Communications in 1999 to create the world’s largest mobile telecommunications company with market capital of around £77 billion. The following year it bought German provider Mannesmann, which doubled the size of Vodafone Group. To this day, it is still one of the largest deals ever, at $202.8 billion (£123 billion).

Fight for 4G licences
Locally, it was also making great strides. In 2000 it won the largest chunk of 3G spectrum, spending £6 billion in comparison to Three’s parent Hutchinson Whampoa (£4.4 billion), Orange (£4.1 billion), BT (£4 billion) and One2One (now T-Mobile), which spent £4 billion. Fast forward to 2013 and Vodafone repeats this success in the fight for 4G licences – spending the most (£790 million compared to EE’s £589 million) and getting the most spectrum, ensuring it has the capacity to grow its customer base and offer it large bundles of 4G data.

However, at 30, Vodafone is not as healthy as it could be. Its latest financial results, for the three months to December 31 2013, show UK service revenues were down 5.1 per cent “due to price competition, particularly in prepaid and enterprise”, though this was not as bad as the decline seen in other European markets – Spain and Italy saw declines of 14 and 17 per cent, respectively.

Vittorio-Colao-web-1

Ambition
“In Europe, conditions are still difficult,” chief executive Vittorio Colao (pictured right) said when the results were published. Group revenues also fell, from £46.4 billion in 2012 to £44.4 billion last year. EBITDA (earnings before interest, tax, depreciation and amortisation) fell from £14.5 billion to £13.3 billion last year. On the other hand, UK revenues still rose, by over £300 million to £1.52 billion, compared with £1.2 billion. It added 191,000 UK customers in Q4 2013.

And Vodafone continues to grow. A cash-rich company (it has a free cashflow of at least £4.5 billion), Vodafone Group has made several purchases recently that reflect its ambition to become a “quad-play” provider – one that can offer TV, broadband, mobile and fixed line bundles. Having bought German cable provider Kabel Deutschland last year and Spanish TV and broadband company Ono this year, some analysts believe its attention is now turning to the UK.

“Companies in the UK are on Vodafone’s shopping list. It would make sense for Vodafone to buy a TV provider or a broadband provider in the UK. The question is when – and this depends on how much of a priority the UK market is for the group. TalkTalk is improving its churn rate and doing well, so buying it would be a positive move from Vodafone,” The Economist Intelligence Unit technology analyst Jason Sumner said.

In the meantime, Vodafone has launched “Project Spring”, a £7 billion spending spree aimed at improving its network so that it can beat the competition when it comes to 4G. EE is investing £1.5 billion in its UK network.

“With the advent of 4G mobile, there is a window for number one or two players in each market to spring ahead and put more space between us and smaller players,” Colao said when the project was launched late last year.

Conclusion
Vodafone is turning 30 with a lot to celebrate – as the UK’s oldest mobile phone brand and its most valuable.

It has lost none of its ambition over the past 30 years as it looks to transform itself from a mobile company to a leading “quad-play” provider.

While group revenues slide and retail stores in the UK are shut, the company still has the ability to invest heavily in its network to ensure it continues to grow.

Phew… a fantastic decision!

Vodafone was nearly spelled “Vodafone”. The word that combined “voice”, “data” and “phone” – was originally rejected by Vodafone co-founder Sir Gerry Whent.

Sir Gerry was unconvinced by a proposal from corporate affairs head Terry Barwick (who died last year) and ad agency Saatchi & Saatchi to spell “phone” as “fone”.

But he finally relented  reportedly sayingto Barwick and the agency.

“In for a penny, in for a pound – you can have your flipping ‘f’ as well’.

The original 1984 media release also predicted that:

“Initially, the new service is likely to find wide use among people constantly on the move such as business executives, sales representatives, journalists, doctors and veterinary surgeons.

“Strong demand is expected from nationwide fleet operators, typically those involved in construction, distribution, service, motoring and the public utilities.”

Nothing about texts and selfies.

Voda-timeline

1984: The Vodafone name is announced to the media on March 22

1985: Comedian Ernie Wise makes the first mobile phone call in the UK over Vodafone’s network – from St Katherine’s Dock in London to its offices in Newbury

1987: Vodata is created as the “voice and data” business to develop and market Vodafone voicemail service “Recall”. Vodapage is also launched, providing a paging network that covers 80 per cent of the UK population

1991: Vodafone and Telecom Finland make the world’s first international roaming call. Vodafone launches its digital (GSM) mobile phone service – the first in the UK

1992: Vodafone and Telecom Finland sign the world’s first international GSM roaming agreement

1993: Vodafone Group International is formed to acquire licences and supervise overseas interests. Vodafone opens its first high street store

1994: Vodata is the first network operator in the UK to launch data, fax and text messaging services over the digital network

1996: Vodafone is the first network operator in the UK to launch a pay-monthly analogue package. Per-second billing on the digital network is introduced, as well as options to buy “bundled” minutes and make off-peak local calls to landlines

1997: Chris Gent succeeds Sir Gerald Whent as CEO of Vodafone Group Plc

1999: Vodafone acquires AirTouch Plc to create the world’s largest mobile telecommunications company

2000: Vodafone acquires German wireless provider Mannesmann and doubles in size. Vodafone acquires the largest available 3G licence in the UK

Vodafone-store-Angel-web

2009: A major expansion programme brings the number of Vodafone retail stores to 400

2012: Vodafone acquires British telecommunications company Cable & Wireless Worldwide

2013: Vodafone launches first 4G service in London. Buys German cable company Kabel Deutschland for £6.6 billion

2014: Announces plans to provide network coverage in the Eurotunnel. Agrees £6 billion deal for Spanish TV and broadband provider Ono. Announces £100 million retail expansion

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