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December 20, 2005
As sales slowdown in existing markets Vodafone looks to developing countries
The world's largest mobile phone company Vodafone is targeting developing countries such as India and now Turkey to offset sluggishness in Europe and Japan.
Growth has stalled within Vodafone's core European markets, and in its Japanese venture, Vodafone K.K. But the company has continued push into emerging markets and recently acquired Turkey's largest operator as part of this initiative. With the acquisition Vodafone gains 9 million new customers.
In March of this year, Vodafone paid $3.5 billion to acquire cellphone operators in Romania and the Czech Republic. Vodafone also acquired 10% of India's biggest wireless company, Bharti Televentures, for $1.5 billion. The company spent $2.4 billion to increase its stake to 50% in Vodacom, South Africa's largest mobile phone operator.
Other developing countries can provide very high margins that the company needs. Bangladesh for example has one of the highest mobile phone rates in Asia mainly due to lobbying (and possibly bribing of govt. officials) by existing service providers to keep new players from entering the market. The Bangladesh government has so far provided explanations that make little sense such as running out of wireless spectrum especially in a country with limited military utilization of the airwaves and few existing service providers. If Vodafone however can overcome artificial barriers setup by corrupt governments regaining lost margins may not be too far away.
Posted by admin at December 20, 2005 12:58 AM