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Page 1

VODAFONE SWOT & PESTLE ANALYSIS

VODAFONE SWOT ANALYSIS

Strengths
. 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 3rd higest market share in India
. 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

Weaknesses

• Products, services
• High customer churn (33.33%)
• Rural India unable to relate to the

brand
• Poor network coverage

Opportunities
.Emerging markets and expansion abroad
.Innovation
.Product and services expansion
. Growing data business and 3G auctioning
. 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

Strengths
• Diversified geographical portfolio with

strong mobile telecommunications
operations in Europe, the Middle East,
Africa, Asia Pacific and to some extent the
US

• Network infrastructure
• Leading presence in emerging markets

such as India

Weaknesses
• Negative return on assets (ROA)

underperform key competitors like
AT&T, BT Group, Deutsche Telecom

• US business not nearly as strong as
European/rest of the world operations

• 80% of its business is generate in
Europe


Opportunities
• Focus on cost reductions improving returns
• Majority stake in Hutchison Essar in India
• Research and development of new mobile

technologies




Threats
• Highly competitive market
• Still lags behind major competitors in

the US
• Extremely high penetration rates in key

European markets
• European Union regulation on cross-

border cell phone usage by customers

Page 2

The main PEST factors of external influence on Vodafone’s value are the following:

Political factors

Vodafone is generally subject to regulations governing the operation of its business
activities. Such regulations typically take the form of industry specific laws and regulations
covering telecommunications services and general competition (anti‐ trust) laws applicable
to all activities.

Most member states of the EU have now implemented the EU Regulatory Framework for
the communications sector, which was adopted in 2002. It aims to encourage competition in
the electronic communications markets, to improve the functioning of the single market
and to guarantee basic user interests that would not be guaranteed by market forces.

The impact of EU Framework on Vodafone was significant. After member states of the EU
enacted national laws implementing the EU Framework, Vodafone had to reduce its mobile
phone termination rates considerably, for example: 23% in Germany (from 14.32 urocents
to 11.0 eurocents), 19% in Italy (from 14.95 eurocents to 12.10 eurocents) and 10.57% in
Spain7 Spectrum liberalisation has been one of the key issues in mobile regulation for a
number of years. At its heart is the simple proposition that markets, rather than
regulators, are better placed to decide the most efficient use of the spectrum. In September
2005, the European Commission published proposals for spectrum reform across the EU,
including proposals to allow holders of spectrum greater flexibility on the use to which it is
put, to allow holders to trade spectrum within a spectrum market and to improve
harmonisation of certain bands. The European Commission has proposed that these
reforms be enacted by 2010

The initiatives concerning consumer protection might become the most important factor
for the future of European mobile phone market. In February 2006, the European
Commission proposed new EU Roaming Regulation, which seeks to reduce by up to 70% of
the charges consumers have to pay for using their mobile phone abroad. These proposals
came into force on 30 June 2007 .The regulation requires mobile operators to offer a
‘Euro‐tariff’ under which the cost of making calls within the EU is capped at 49 eurocents
and the cost of receiving calls within the EU is capped at 24 eurocents. The regulation also
requires that wholesale roaming charges within the EU are capped at an average rate of 30
eurocents per minute within 2 months of the regulation coming into force and that
operators provide certain tariff transparency services to customers when they roam. The
level of the retail and wholesale caps will fall further 12 and 24 months

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