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EXCERPTS Contd...
Vodafone's Woes
In Europe: In 2002, the European Union (EU) adopted a new regulatory framework for the communications sector and asked its member states to implement it by July 24, 2003.
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The new framework laid down guidelines for matters such as the objectives of the national regulatory authorities ('NRAs'
of the member states), the method through which telecommunications operators
were to be licensed, measures for protecting consumers, and ensuring the
universal provision of certain telecommunications services and the terms and
conditions that guided the way in which operators interconnected and provided
access to each other. The new regulatory framework' s restrictions among various
others included one on 'call termination rates' of mobile operators. Vodafone' s
key market was Europe and the company claimed that this market had been affected
by the new regulatory framework...
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Outlook
After the impairment review, company shareholders pressured Sarin to sell the company's businesses in the US and Japan. According to them, Verizon used an incompatible wireless technology, CDMA, and hence provided very little economies of scale to the company.
They also
pointed out that since Vodafone was only a minority partner in the
venture, the company could not leverage on the benefits of its
'Vodafone' brand. However, despite the opposition from shareholders,
Sarin said that he would retain Vodafone's stake in Verizon. He said,
"We look at Verizon and our presence in the U.S. as an important asset
to the company. The board reviews the Verizon situation from time to
time. We'll continue to review."However, Sarin also said that he was
not opposed to a future sale of Verizon whereby shareholders could gain
the maximum benefits. Many analysts were of the view that Sarin sold
Vodafone KK in order to calm the investors...
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Exhibits
Exhibit I: Share Price Movement of Vodafone
Exhibit II: Vodafone's Logos
Exhibit III: Vodafone's Worldwide Mobile Telecommunications Businesses as of
September 2000
Exhibit IV: Vodafone Group - Benefits of Scale
Exhibit V: An Overview of one Vodafone Program, 2005
Exhibit VI: Summary of Vodafone's Telecommunications Businesses as on March 31,
2005
Exhibit VII: Total Group Operating Profit/(Loss) of Vodafone Before Goodwill
Amortization and Exceptional Items from 2000 to 2005
Exhibit VIII: Summary of Key Performance Indicators of Vodafone's Principal
Markets in Europe
Exhibit IX: Operating Proft/Loss of Verizon Wireless from 2003 to 2005
Exhibit X: Market Shares of Wirelss Companies in the US in Early 2006
Exhibit XI: Summary of Key Performance Indicators for Vodafone's Japanese Market
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