Vodafone Insight 2009: Comparison of Relative Strengths vis-?-vis France Telecom, Telefonica and Hutchison Whampoa-Aarkstore Enterprise

The battle in the telecoms industry for dominance has never been more vigorous and fierce. Mergers and acquisitions are expected to once again become the order of the day with almost all companies trying to increase their footprint in the global arena.

With the recession hitting global economies in 2008, times have been difficult for the telecoms industry to raise the funding necessary for growth and expansion, concurrent with the views of a report by the UN on the global telecoms industry. With a constant downward pressure on prices and a constant upward pressure on facilities demanded by mobile customers, telecom companies are finding it difficult to meet up to the customer expectations. In a report by Ericsson, the way of the future is described as ‘free and cheap’. This environment of cut throat competition due to customer expectation is turning the telecoms industry into an increasingly volatile field.

In view of the present climate, it has become imperative for telecom companies to have a sound strategy with strong financials to deliver on the strategies. ‘If you allow technology to take charge, you lose. That is the fundamental lesson here. User experience will always win’, says one telecom company. It will be those companies who successfully align their strategy with the demands of their customers that will survive and dominate in the end.

How the future will play remains to be seen, but for a telecoms company, it is given that technology will play a dominant role in its development and the development of the market as a whole. From 2G to 3G and 4G, technology has been on the edge of its seat and is always inching for more, enabling a wide array of applications to run on mobile devices. ‘Creative destruction’, as Schumpeter, a famous economist and a political scientist aptly put it, describes the innovation in the telecoms industry.

This report is the latest in an annual series of reports documenting Vodafone and its market position. In this report, Vodafone’s position is comprehensively contrasted against 3 of its principal rivals on a global scale, namely Telefonica-O2, France Telecom/Orange and Hutchison Whampoa (mainly through its H3G Group and HTIL businesses).

Strength in strategy versus sound financial management or both?

Strategic perspective is what is said to give direction and strength to a company’s operations, its vision for the future, its investments and its performance in the financial markets.

While strategic management is important, financial management to carry on the strategic objectives of a company is equally important. The flow of analysis in this report involves comprehensive analysis of each company’s strategy and then moves on to their financial management performance. This has been done keeping in mind that a strategically sound company also needs a sound financial management.

The report first applies this analytical framework to Vodafone, and then to France Telecom, Telefonica and HWL. The analysis of each company takes into account how the history of each company plays the most important role in the development of strategy.

Leading on, the strategic analysis of all these companies is carried out followed by ratio analysis of the operations of each of the companies in question.

Finally, a comparison is made between the four companies as to which company is better suited to tackle future developments in the telecommunications industry.

Additional financial analysis has been carried out in the end in order to provide a comprehensive view of each of the company’s performance in the stock market and what interested investors can expect to gain by investing in these four companies. The approach to this analysis is done in with the principles of value investing, an approach followed by legendary investor Mr. Warren Buffett.

This report gives a concise view of the four companies which will enable a reader to understand the companies and also the telecommunications industry in general and how both are going to play out in the future.

Who should read this report?

This is a unique, independent analysis and includes primary research. Inferences have been drawn from trusted sources to help the process of analysis when required. It is expected that the report will prove beneficial to decision making personnel in telecoms companies or investor.

Companies in focus

This report analyses which, among the four companies, has a better chance of being one of those telecom companies that will lead the way into future generations. Views on stock market performance, financial management and capability of higher management of the four companies will be analyzed in detail because these indicators would give a comprehensive idea about their potential in strategy fulfillment.

Though these four companies are direct competitors in very few markets, the best known being the UK, it can be deduced from their growth strategies that they will soon become direct competitors in many markets in years to come. Taking this into account, this report is a comprehensive insight into the global telecom market.

Why you need to order this report today:
Mobile Operators – Learn what issues face the leaders in the telecommunications industry, and gain insight into the developmental issues facing them. Learn how to mitigate problems that might arise in a scenario where expansion is the key.

Institutional investors – Gain insights into the four companies covered and view an analysis done with the principles of value investing. Gain insights into the complete financial ratio analysis of the four companies.

Who needs to read this report?
Directors, VP and Senior managers in:
• Mobile/Cellular carriers and operators
• Mobile handset manufacturers
• Institutional Investors
• Analysts
• Mobile applications developers and engineers
• Mobile advertisers/marketers
• Mobile web content players

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