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Wednesday, July 12, 2006

Red, Rock Solid and Restless

The new CEO of Vodafone UK, Nick Read, has given an interview to a Trade Magazine, Mobile News, and it is pretty revealing as to his future plans:

"You will see more aggression in the way we assert our dominant market position. Its important to keep growing our revenue market share. We’ve not done this and we need to address this problem."

Exactly, once you start losing share of the total pot of revenue, you start losing the network multiplier effect and pressure comes from above to cut costs to maintain margin and morale slides. An ever decreasing circle of despair and gloom descends onto the company which is extremely hard to escape from.

"We are making a conscious effort to make sure our employees don’t just go through the motions, but that they are positively engaged in the company, that they constantly emphasise our three key strengths. We are red, rock solid and restless. We may lose people who don’t fit in to this culture and we may have too many people of a traditional skill-set where that is not the area of growth."

I’m not so sure about the Red, Rock Solid and Restless bit, but it looks as if Read will be getting rid of quite a few people who don’t see eye to eye with him, which is a good thing if executed correctly.

"The new strategy is beyond traditional mobile, centred on total communication. We obviously have a clear market dominance in corporate, SME and SoHo in the UK. We want to build on this by enabling mobility of applications through multi-access devices."

There are shades of the MobilePlus strategy in this statement: I’m not so sure how this will lead to revenue market share gains though.

"We will aggressively pursue these new markets and to do this we have to move at speed. We already have a great profile in the business sphere, but there is still some infilling. We may need some small acquisitions to fill the portfolio, or we may develop our partnerships and work more closely with service providers. Other operators insist on doing it all themselves, but to move fast, we must partner."

This is more like it, he is going to buy some market share by acquiring Service Providers, witness yesterday's purchase of Yes Telecom, and help other Service Providers to grow. This is the business model that small UK mobile entrepreneurs love – build a business with the help of a big operator, sell it to them and retire to Spain.

He also has a few words for the consumer segment.

"We’ve got to get customers to use us every day. The number of people who have their mobile phone tucked away in a drawer or the glove compartment is still huge. We have to educate them with offerings like Stop The Clock and Passport to use their phones when they ordinarily wouldn’t. We are also working on new content and product sets, such as the mobile TV project with Sky to enforce our brand in the customers eyes. We’re working on the simplicity and the ease of use of our products. For instance, Vodafone live! was redesigned recently. This is the seventh generation of the product."

I’m not sure any of above product sets will get people to get the mobile phone out of the drawer, but at least he is making an effort.

All the above are fine words but without seeing the real strategy it is difficult to forecast whether Voda UK will turn itself around. The only way to judge this is an actually steady improvement in revenue market share gains...