Vodafone Faces Criticism from Major Investor Over Growth Strategy

Strategic Insights -

Standard Life Investments, the investment arm of Edinburgh-based insurer Standard Life, has become the first major investor to publicly criticize Vodafone's growth strategy. The criticism centers around Vodafone's 45% stake in Verizon Wireless, which has been valued at around £25 billion. David Cummings, head of UK equities at SLI, believes that selling off this stake would allow Vodafone to focus on its Asian and European business, where pricing pressure has been mounting.

Key Takeaways:

  • Standard Life Investments has become the first major investor to publicly criticize Vodafone's growth strategy.
  • The criticism centers around Vodafone's 45% stake in Verizon Wireless, which has been valued at around £25 billion.
  • David Cummings, head of UK equities at SLI, believes that selling off this stake would give Vodafone a massive earnings uplift and allow it to focus on its Asian and European business.
  • Vodafone has added 7.1 million new customers on an organic basis in the key Christmas quarter, taking its global total to 179.3 million.
  • The customer boost in the third quarter to December 31 was ahead of City forecasts, which were in the range 5.4-6.3 million.
  • Vodafone has stuck with its guidance for the current year and its outlook for the next year, expecting organic growth for this financial year in the proportionate mobile revenue range of six percent to nine percent.
  • Rival O2 has seen its global customer base rise by 18 percent to 24.4 million, with 895,000 additional customers in the UK.
  • Vodafone has added 3.1 million 3G devices to its network over the quarter, taking the total to eight million.

Statistics:

  • Vodafone has added 7.1 million new customers on an organic basis in the key Christmas quarter.
  • The customer boost in the third quarter to December 31 was ahead of City forecasts, which were in the range 5.4-6.3 million.
  • Vodafone's global customer total is now 179.3 million.
  • The UK Vodafone subscriber base has risen by seven percent to 16.3 million.
  • Average revenue per user (ARPU) in Vodafone's home market fell by 4.3 percent.
  • O2 has seen its global customer base rise by 18 percent to 24.4 million.
  • 3.1 million 3G devices have been added to Vodafone's network over the quarter, taking the total to eight million.

Sources:

  • "SLI hits back at Vodafone," The Scotsman, 26 April 2007
  • "Vodafone annual profit up 21%," BBC News, 26 April 2007
  • "Vodafone annual profits surge," The Financial Times, 26 April 2007
  • "Standard Life Investments attacks Vodafone's growth strategy," The Telegraph, 26 April 2007