Pan EuroNetworks

The network to beat all European networks is the Vodafone network, which has been built up since 1989 when VOD made its’ first European foray with a 4% investment in what would eventually become SFR in France. It has accumulated the stakes through initial investment, stake increases, mega-deals, minority squeeze-outs and invented a new concept - the partner network.

The gaps in the networks basically consist of four parts:
i) Parts of the ex-Yugoslavia. Serbia and Bosnia may be solved quite soon with the forthcoming auctions – a win for Telekom Austria would be nice in PlanetVod. Who knows about Macedonia, Kosovo and Montenegro?
ii) The Holdouts – Norway & The Slovak Republic only have 2 operators-none of which seem to particular allies of PlanetVod.
iii) The Principalities. Small states such as Monaco, Gibraltar, Andorra, Jersey, Guernsey and Isle of Man. All of which are probably too small to support more than one operator and a visit from the VOD Executive would probably eat all partner profits for the next 12 months.
iv) The Wild East – Even if there was an opportunity for an investment would anyone be able to shoulder the political risk?Mind you, Telenor's so called partner in Russia/CIS are rumoured be looking for a new partner

So, for the foreseeable future, I can’t see VOD completing its’ European Network. In fact, with recent events such as the sale of Sweden and both Swisscom & Belgacom stating they would be quite happy to buy VOD’s stake, I can see PlanetVod shrinking as the more likely outcome.

The recent buy-in to Turkey, sell-out from Sweden and least we forget the partner network deals in Bulgaria and Latvia doesn’t seem to have moved the share price much. The deal in Sweden will face the Law of Unintended Consequences and be the starting point for the complete break-up of the group.

The problem seems to me that it is extremely difficult to work out what are the synergies of having a pan-European network. Nothing tangible has ever been stated and therefore in my opinion no value can be attached.

Therefore the only thing left is to compare the strategy and performance of Vodafone against its' major European competitors: T-Mobile, Orange, Telefonica, Telenor & TeliaSonera and the other big pan-continental network, Verizon Wireless. This is the subject for tomorrow night.