Top 6 Vodafone Investor Day Snippets

Rather than a blow by blow account of the three hour Vodafone Mediterranean Festival, I’d prefer to list my list of interesting factoids gleaned from the event.

1. Existing KPIs don’t make sense in a 1.7x multi-sim environment.

This is from the CFO of Vodafone Italy – so it must be true. Some had already drawn the same conclusion months ago and some are currently working on a meaningful set of metrics.

2. Rental Cost UHF Spectrum - €18m per annum

Vodafone Italy has rented a nationwide channel from Mediaset at a cost of €16m per annum. I presume they have only rented one 8MHz TV Channel in the 470MHz-854MHz band.

Using €18m / annum as basis and applying a discount of 11.3% (OFCOMs estimate of the mobile operators WACC) over 15 years which happens to be the normal length of a OFCOM license gives a value of €113m.

Given that the UK is a bigger economy than Italy, this figure should provide a benchmark for the value of the UK “digital dividend” spectrum which is 14 8MHz channels x €113m. – more or less around €1.6bn.

Of course, the value of spectrum will go up or down depending upon the short term success or failure of the various broadcast MobileTV trials.

My own personal opinion is that I am amazed that Italy has found spectrum for TIM, H3G Italia and Vodafone for their own DVB-H broadcast networks, whereas the UK is struggling.

3. Vodafone Italy & Spain DSL Strategy

It seemed that the Italians were more excited by no internet and light internet homes than the heavy internet homes. Obviously the heavy internet homes need mega-DSL pipes served by the re-sold FastWeb product, whereas no internet are served by the Vodafone Casa product and light internet by the Vodafone Casa with Internet Box – HSDPA boxes.

I like this strategy a lot: focus on the least competitive element of the market using your own infrastructure. Italy are now up to 362k Vodafone Casa Homes in 5 months which is a pretty good ramp-up.

Spain seemed to have a very similar strategy.

4. Euskaltel MVNO

Euskaltel wholesale customers (450k) come on-net in January 2007 –nice for VOD shareholders.

5. Ethnic Market

Vodafone have a successful product in Spain targeting the ethnic community which allows them to make calls to their home country at the same rate as local calls. Italy is launching this product going head-to-head with Wind who have been successful in this market. Spain explicitly stated that dependency on mobile in this segment is huge. I can see a huge market for this product in the UK, especially targeting Eastern Europeans where Vodafone have already networks and presumably could carry a lot of the traffic on-net.

6. UK compared to Italy and Spain

The Consumer segment in the UK seems to be well behind the Italians and Spaniards not only in performance but also in product development. Some of the UK tariffs such as Stop The Clock and “Free” Weekend Prepaid Calling (subject to £5/week spending) seem to be localized “versions” of long running promotions from overseas subsidiaries. I find this totally bizarre. What has the UK operation been doing over the last few years? Whatever it was – it was not focusing on the operations.