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Concise Insight Report on Vodafone
Vodafone - Global cellular architect or market
opportunist?
05 January 2004
Through equity investment and strategic partnerships,
the Vodafone Group has a footprint in 36 countries. 26 of those
are equity-held investments. As a result of that market presence,
Vodafone is a significant cellular player. "At the end of
3Q-03, on a full venture basis, 23.8% of the world's subscribers,
or 315 million, belong to Vodafone equity-held networks. In 2003,
116 million handsets out of the total 465 million sold in 2003
were sold to Vodafone equity-held network subscribers. If you
were to add up all the service revenue from Vodafone equity-held
networks, on a full venture basis, they stood at US$ 103 billion
in 2003, which is 31% of total service revenues from those markets",
said Jake Saunders, Director of Concise Insight.
2004 will see Vodafone join Hutchison3G in offering
3G services. While Hutchison3G had to start building up market
awareness and momentum, Vodafone has had the luxury of holding
back commercial launch until better conditions materialise. There
is a quiet confidence that a number of Vodafone cellular networks
will commence service by 2Q-04. However, 3G handset performance
(especially battery life) and subscriber uptake is likely to fail
to meet expectation through 2004, and into early 2005, for all
3G operators.
Nevertheless the value proposition for 3G is slowly
but surely coalescing. From Concise Insight's own analyses of
each market in which Vodafone operates, mobile data, mostly in
the form of text messaging and premium text information services
has grown substantially. In the UK, for example, mobile data grew
from 6.6% of service revenues in 1Q-00 to 15% in 3Q-03. This follows
a similar pattern in Germany and Japan where mobile data usage
is even higher. The notable exception, considering its market
conditions, is the US. Verizon Wireless reported just 1.8% mobile
data revenue in Sep-03.
By 2006, 3G adoption and usage needs to be well
underway. Aggregate cellular subscriptions will flat-line by 2006
in most developed markets. The 1Q-01 to 3Q-03 collapse in investment
confidence in the wireless sector has been driven by hype over
untried technologies but also from diminishing net additions.
3G needs to deliver the requisite bandwidth and functionality
to drive down underlying input costs so that 3G tariffs and features
can be offered to a mass market. This need for innovation will
be particularly necessary in the handset market-place.
Voice usage is growing by leaps and bounds. Indeed
3G voice communications could very well become the 'it' application
as "home-zone" and "business-zone" tariffs
becoming increasingly prevalent as well as push-to-talk and IP-based
group-talk applications pick up popularity. In the last year or
so, the growth in voice usage has forced many operators, including
Vodafone, to re-state their predictions for the percentage that
mobile data represents of service revenues. Mobile data revenue
growth has not so much as slowed down as the contribution made
by voice to service revenue has expanded.
Source: Concise
Insight Europe Ltd
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