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Sunday, July 30, 2006

Vodafone: Key Leading Indicator

As I’m sat browsing the Sunday Papers, I’m struck on how every man and his dog can’t resist passing judgment on Vodafone’s challenges:

The Sunday Times concentrates on Vodafone cutting the subsidy on 3G handsets and therefore the proportion sold compared to GSM only handsets has dropped. It also looks at the survey on customer loyalty with o2 (81%) well ahead of T-Mobile, Vodafone and Orange. The hapless H3G UK only has loyalty of around 33%. This is most important indicator of all as the operators either lose customers or have to provide higher subsidy to keep their base. Though extremely interesting, the whole of Sunday Times article is basically a re-presentation of a Enders Analysis Report and as such constitutes a very good advertisement for that company.

The Sunday Telegraph focuses on the (de)-centralisation question and notes that the new Chairman, Sir John Bond achieved great success at HSBC which is known as the “the world’s local bank”. The article goes on to say that Sir John Bond has let it be known that Arun Sarin is living on borrowed time and operational performance must improve for him to survive.

The Sunday Business (or whatever it is called this week) argues that convergence is the most important challenge facing Vodafone, much more so than who is the leader: it notes that o2, BT and Orange are planning converged network. In a different article, the same author in the same paper on the same day goes on to speculate who is going to replace Arun Sarin saying Peter Erksine (Telefónica), Vittorio Colao (unemployed) and Stan Miller (KPN) are the favourites.

So there we have three different papers focusing on three different strategic issues and two commenting on the expected short life span of the CEO. It is apparent that Vodafone will far it nigh on impossible to keep itself out of the papers. The British Press currently spell blood and they will not let go until there appetite is satisfied.

Personally, I think the leading indicator is when Sir John Bond lets Arun Sarin go, because I think that Sir John Bond will hold onto Arun until he thinks the bottom has been reached. It is better to give the next man/woman a fresh start without worrying about managing the decline. It may take 12 months, it may be shorter, but when Sarin goes: we all will know that Sir John Bond thinks the bottom has been reached and Vodafone’s fortunes will on the up from that moment.