Vodafone Head Arun Sarin’s sudden departure Vodafone revealed their annual pre-tax profits have gone up 2% to £8.9bn. But that is no reason to cheer as they even revealed the departure of one of their most eminent persons who has helped shape and promulgate the brand to the fullest. Vodafone chief executive Arun Sarin is stepping down. The head of one of Britain’s biggest companies reigned for five years. Mr. Sarin will retire in the end of July. He had a bad patch in the year 2006 when shareholders revolted against him and criticized his performance. About 15% of shareholders either abstained or voted against him continuing as chief executive.
Given the rough times in European markets Mr Sarin expanded the Vodafone network in emerging markets such as India, Romania, and Turkey. Vodafone’s business in emerging markets is performing well, especially in India where revenue had jumped by 50%. With Mr. Sarin’s the firm has been able to sign up large numbers of new users. Most recently, Vodafone was in talks with South Africa’s MTN.
Vodafone’s chief executive Arun Sarin has decided to step down by end of July. He will be replaced by Vittorio Colao, currently responsible for Vodafone’s European operations. Sarin, who was heading the mobile giant since 2003, said that he has accomplished the task, assigned to him after the exit of Sir Christofer Gent.
Sarin pulled Vodafone out of difficult markets, at the same time extended it’s reach to different global markets quite successfully. He cut company’s debts, introduced mobile telecom products and made history with India’s Hutchison Essar takeover in 2007. Sarin more than doubled company’s user base from 100m to 260m in the span of 4 years.
In 2006, 10% of shareholders claimed he lacked vision and voted against his reappointment. But Sarin proved them wrong by reporting a jump of 5.7% (£10.1m) in operating profits and the growth of 14% (£35.5bn) in revenues. Mr.Sarin is confident that Vodafone’s operating profits will zoom to £11.5bn in the current year with phenomenal growth in the new markets.
Sarin’s future plans are not known but he is likely to move into private equity. Sarin’s successor Vittorio Colao, 46, rejoined Vodafone in 2006, and since then been identified as future CEO.
Orange and Vodafone have joined hands to share network resources. Both of them have been in extensive talks about how they could share resources efficiently for a year now. Orange and Vodafone revealed that the deal to share 2G and 3G mobile masts in the UK would result in customers benefiting in terms of better mobile coverage quality. Now that they have joined hands, their united customer base will benefit from their joint resources. The deal is expected to decrease operational costs for both the companies as the number of mast sites can be lessened roughly by 15 per cent - say 3,000 sites - in the first couple of years itself. This will have positive impact on the environment too. Both the companies said that they intended to continue with their separate networks as of now. This agreement is a result of a recent network joint venture between competitors 3 and T-Mobile.
Orange and Vodafone together have around 27,000 masts all across the country that serve a collective 34 million mobile phone users. Both of them will not share physical infrastructure in that sense but will definitely reduce the number of mast sites by keeping transmitters on the same site. This will save both of them a lot of money on running costs.
Three of the UK’s biggest internet service providers - BT, Carphone Warehouse’s TalkTalk and Virgin Media – have joined hands in order to use a new advertising platform that will allow them the access to the growing online targeted-ad market. They have signed up for using a system that is created by Phorm. This system connects advertisers, websites as well as ISPs with the intention of producing a more targeted ads depending on a user’s anonymous browsing tendency.
Phorm believes that most advertisers will easily agree to pay more in order to place ads on sites that have subscription to the Open Internet Exchange (OIX) marketplace. This is so because the advertisements will be more applicable to users depending on their previous searches.
The Internet advertising sector has really grown in the past few years. As per a report by media-buying firm ZenithOptimedia, the average spending on the internet would grow by 69 per cent in the coming three years. The internet will have roughly about 11.5 per cent share of all advertising budget by 2010. it is expected to become the third largest medium, just a little behind television and newspapers. Phorm and the ISPs will enjoy a boost in revenue due to the process. Phorm has signed up websites belonging to the Financial Times and iVillage, and advertising agencies like Universal McCann.
Due to pressure from Motorola’s investor, Carl Icahn, the motorola handset business may be restructured. This is because of the loss in business on the hand-sets and its struggle to maintian its marketshare. According to last year’s figures, the company has incurred about 42% loss on stocks and the sale on the hand-set units lost about $388 million in the last quarter of the year.
Unfortunately Motorola has been loosing its market shares against Nokia, Samsung and Sony Ericsson. In the business race, Samsung took over Motorola’s second position last year, and now Sony Ericsson is overtaking Motorola’s third position this year.
According to Greg Brown, President and Chief Executive at Motorola, “We are exploring ways in which our mobile devices business can accelerate its recovery and retain and attract talent while enabling our shareholders to realize the value of this great franchise.”
Apart from manufacturing hand-set units, Motorola also manufactures wireless network equipment, set-box top and modems. Sale on the wireless network grew to about 35% last quarter of the year, while revenue on modem and the set-box top grew to about 35%.
Regulator Ofcom has helped UK’s mobile operators save millions of pounds per year. Under the present system, when a call is sent to a mobile either from a fixed-line or a mobile phone, the network of the individual making the call has to pay the network that receives the call. Ofcom has reduced the rate that operators can charge each another for connecting calls. So for the first time, third-generation network 3 as well as other 3G providers will see a new “termination rate” charges of 5.9p per minute. UK’s other four major operators will be subject to rates of 5.1p per minute, irrespective of whether the call is connected over 2G or 3G.
For T-Mobile and Vodafone, the rate changes means a 20 percent reduction. For O2 and Orange it will result in a 10 percent reduction. Ofcom believed that the networks would be able to save roughly in the range of £400m and £500m over a period of four years. It also expects that these savings will be passed on to the consumers. An O2 spokesman believed that call rates are supposed to come down all across the board due to competition. He also felt that fixed-line telcos will be the biggest beneficiaries and they may pass on their savings onto consumers. However, chief executive of telco Cable & Wireless, Jim Marsh, feels that network customers will have to face the brunt by paying more for calling mobile users.
Vodafone is hoping to enhance their mobile broadband market in the UK by slashing their broadband prices. It is expected to introduce the £15 per month 3GB price plan for the UK consumers. But this dirt-cheap price will be applicable only for a partial ‘promotional period’ along with the business gifts of free USB modems being given away. Vodafone believes that there is a huge demand for consumer mobile broadband and that is why it has slashed its prices in order to provide better value to its customers. It aims to attract consumers by providing cost reductions and/or improved data-usage limits.
Now, business customers can expect more value for the same money. Vodafone said that the monthly fair usage on its Mobile Broadband Business and Mobile Broadband Business Travel packages will increase from the limit of 3GB to 5GB. Customers are given USB modems as free business gifts, if they sign up to a contract of at least 18-month. All business travelers who are using Vodafone Connect Abroad in Europe for every 24-hour session.
Vodafone confirmed that its UK network had a top downlink speed of 7.2Mbps in London as well as major airports and a maximum of 1.44Mbps uplink. On-the-go data lovers should expect much better value for money from Big Red.
O2, owned by the Telefónica group, announced that all its customers in the Czech Republic, Ireland, Germany, Spain and the UK can enjoy price cuts in excess of 40 per cent if they want to use their phones for emailing or surfing the web in other European countries. UK customers can experience a price reduction of 57-80 per cent.
The benefits of these cuts can be enjoyed by all individual customers, irrespective of the fact whether they are on a prepay deal or a contract. The cuts will be applicable before July 2008. Previously, contract customers had to pay a tariff between £6 and £7.05 per megabyte of data depending on the country concerned. Prepay customers had to pay around £15 per megabyte. As per the new scheme, both groups will be paying just £3 per megabyte. If the customers choose a data bundle, they can expect an even better deal. The charges for text messaging while in roaming has also undergone a sea change for prepay customers. The rate has been slashed from 49p to 25p per message.
An official spokesperson for Vodafone said that customers did not prefer to be charged on the basis of megabyte. Thus it charges a flat rate of €12 per day irrespective of the fact how much data is used. An official spokesperson of T-Mobile said that it did not have any plans to follow O2’s gesture. Instead it provides 31,000 wi-fi hotspots worldwide.