Report #148 Intelligence & Insight Monthly | Vodafone and its rich web of OpCos — tracked and analysed worldwide | October 2016 Mark Hillary/flickr.com Ulrika/flickr.com Jordiet./flickr.com Vodafone Medien/flickr.com Bloomberg Vodafone Medien/flickr.com Celfocus Nokia Vodafone Medien/flickr.com 6 12 26 40 46 Jio blitz disrupts Afrimax tie-up now Portugal JV Celfocus Convergence- Egypt licence debacle Indian IPO schedule into a third market speaks on telco SI challenged VfUK drags on further short on options Commercial Analysts providing Global Telco Organisational Intelligence & Insight for Strategic Relationship Advantage Grow your strategic relationships in 2016 Market Mettle is an excellent sales resource, providing a consolidated view of activity within the target organisation. It provides insights and analysis that help shape the sales strategy and identify emerging opportunities. Vice-President, Sales www.marketmettle.com Report #148, October 2016 3 EXECUTIVE BRIEF 3 EXECUTIVE BRIEF Executive brief 5 GROUP 6 Strategy GROUP: Vodafone continued to look set for 9 M&A a prolonged period of uncertainty over its 9 People flagship emerging market presence in India, after 10 Global Technology acknowledging that the tumult thrown up by new rival 12 Group Commercial Reliance Jio’s launch has hit its plans for a local share 18 Legal and regulatory listing. Jio’s Welcome Offer blitz was said by Group 19 Supply chain Chief Executive Vittorio Colao to have impacted 26 Profile “at least… the timing” of the flotation — which is seen as a key strategic play for both Vodafone India 30 EUROPE and enabler of broader Group moves and M&A. 31 Germany The disruption of Jio’s debut came as VfIn (and 31 Ireland several rivals, including the new entrant) shelled out 34 Netherlands yet more money on spectrum rights, after bidding in 35 Romania India’s latest multi-band frequency auction. [pp.6,7.] 36 Spain 37 UK While Vodafone management continues to report strong progress in assimilation of its recent, major 42 AFRICA, MIDDLE EAST, AND ASIA‑PACIFIC cableco buyouts — Kabel Deutschland and ONO — both REGION integration processes remained in the shadow of legal 43 Australia — Vodafone Hutchison Australia entanglements. Activist hedge fund Elliot Management 44 India scored a victory in its ongoing battle with KDG over the 46 Egypt takeover’s valuation of the operator, while Vodafone said 47 Kenya — Safaricom it is to launch appeals against Spanish tax rules that have 49 New Zealand complicated legal integration of ONO. [pp.9,38.] 50 Vodacom — South Africa Vodafone Ventures, the Group’s increasingly quiet 53 FURTHER READING startup investment arm, looked to have divested its stake in customer retention specialist Pontis after the 56 INDEX latter firmed up a long-anticipated sale to Amdocs. [pp.9–11.] Vodafone continued to build out the reach of the Partner Markets federation in sub‑Saharan Africa, expanding its relationship with Dutch wireless startup Afrimax Group to a third territory — Cameroon. The two partners reasserted plans to explore opportunities elsewhere in the region, again posing the question of how Vodafone will manage potential conflict with existing African interests.In the Middle East, Zain was lost as a partner for the second time . [pp.12–16.] Commercial Analysts providing Global Telco Organisational Intelligence & Insight for Strategic Relationship Advantage Report #148, October 2016 4 EXECUTIVE BRIEF People movements included the installation of a new AFRICA, MIDDLE EAST AND ASIA‑PACIFIC: head for the Group’s Vodafone IoT unit, continuing the Vodafone Hutchison Australia indicated eagerness to recent reshuffle of central enterprise services leadership. “explore opportunities” in the developing, 4G‑based [p.24.] emergency services communications space, after being named among the initial supporters of Nokia’s new Paulo Glórias, Business Development Director Mission Critical Communications Alliance. VHA described of part‑Vodafone‑owned IT systems integration the grouping’s formation as a “really important step in specialist Celfocus, spoke to Vodafonewatch about collaborating and developing the best ideas into solutions its strategic direction and most recent activity with that leverage commercial 4G networks to provide the Group, particularly around customer experience improved public safety”. [pp.43,44.] transformation and convergence. [pp.26–29.] Alongside India, Egypt remained a major area EUROPE: Vodafone Germany flagged investments in of competitive and macro uncertainty for the data centre and network infrastructure to bolster its AMAP Region. Vodafone Egypt and its two mobile claim as the operator for the “Gigabit Society”. A new, rivals rejected new 4G licences offered to them by the “Super‑Core” data centre was opened in Berlin, and VfD country’s National Telecommunications Regulatory released “up‑to‑375Mbps” mobile network connectivity in Authority, and enlisted the GSM Association to provide 22 German cities. [pp.31,34.] backup for an expected renegotiation attempt. The move not only leaves a possible gap for new Enterprise customer experience improvement continued to challengers to enter the market, via auction of the appear an area of priority for central operations and OpCos. leftover airwave rights — it also sees junior VfEg Dutch vendor Calvi highlighted an engagement with VfD parent Telecom Egypt move closer to a standalone on billing personalisation and telecoms expense management mobile entrance that would disrupt both the market solutions in the business-to-business market. [p.33.] and VfEg’s ownership. TE was the only current market player to take up the offer of a 4G licence. [pp.46,47.] Vodafone Spain highlighted expansion of its fibre‑to‑ the‑home services and launched new promotional offers, as Safaricom dismissed leftfield rumours of a play by well as mooting an upcoming DOCSIS 3.1 upgrade for ONO’s Facebook for its much-vaunted M‑PESA m-money business. cable network, as competition ramps up between it and The operator trumpeted revenue and user growth for the wireline rivals such as Orange Spain and Telefónica España. service, driven by resilience and flexibility afforded by its [pp.36,37.] recent shift to local infrastructure platform G2. [pp.47,48.] Vodafone UK’s direction on converged service Vodafone New Zealand flagged expansion of competition remained less confidence‑inspiring. wireless and wireline network rollout ambitions in Vittorio Colao indicated that protection of market line with new targets associated with the country’s Rural share and profitability will remain the priority for Broadband Initiative. [p.49.] the struggling OpCo, and, despite recent (tentative) moves on wireline broadband and TV, predicted it will Next‑generation wireline network infrastructure see “almost no profitability”in the consumer fixed-line continued to be a developing area of investment market unless regulatory battles with incumbent BT for Vodafone’s emerging markets businesses. Vodacom go its way. [pp.40,41.] South Africa, which recently indicated eagerness to speed up a disrupted fibre rollout strategy, struck several agreements to lease capacity on other players’ wireless infrastructure. The most prominent tie-up was a reciprocal deal with public transport provider the Passenger Rail Agency of South Africa, involving dark fibre leasing and resale of Vodacom Business’s services to Prasa clients. [pp.50,51.] Commercial Analysts providing Global Telco Organisational Intelligence & Insight for Strategic Relationship Advantage Report #148, October 2016 5 GROUP Vodafone Vodafone Medien/flickr.com Jordiet./flickr.com Group STRATEGY 22 Vodafone silent on EC roaming time limits change 6 Jio’s free 4G assault hits Indian IPO 22 The only way is down 6 Months before Jio ripples dissipate 23 Arbitrage and other worries 7 Jio move has M&A implications inside and outside 23 Don’t fret, says EC India 23 Brexit, so why care? 7 More cash for Indian money-pit PROFILE M&A 26 Celfocus, Vodafone’s behind-the-scenes SI investment 9 VfV slims down further as Amdocs snaps up Pontis 26 Skin in the game 10 Caringo and Taqua also in action 26 Selling focus 10 Selling mode 27 Working the system 28 CX, convergence and IoT GROUP COMMERCIAL 29 5G opportunity still unclear 12 Afrimax tie-up expands into Cameroon… 29 Avoiding overreach 13 …but Vodafone’s presence retreats in Asia LEGAL AND REGULATORY 18 Group warm on EC telco masterplan (but with caveats) 18 Passive aggressive 19 Not entirely satisfied 20 Investors need long-term certainty, say EC 20 Radio harmony 21 5G action 21 A more level playing field? Commercial Analysts providing Global Telco Organisational Intelligence & Insight for Strategic Relationship Advantage Report #148, October 2016 6 GROUP Strategy Jio’s free 4G assault hits Indian IPO Bankrolled by Mukesh Ambani, Chairman of Reliance Industries Group Chief Executive Vittorio Colao confirmed and India’s richest man, Jio is aiming to attract around the operator’s planned listing of shares in one million subscribers-a-day during the Welcome Offerperiod, Vodafone India (VfIn) has been pushed back, to take it quickly to the 100 million-mark (and well beyond the following the highly aggressive, 1 September 2016 70–80 million that most analysts think the venture requires to entrance of newcomer Reliance Jio Infocomm turn a profit). However, reports since the launch have mooted (Vodafonewatch, #147). slower uptake, in the region of 500,000 per-day, with SIM card availability and service quality cited as possible inhibitors. Speaking at Goldman Sachs’ September 2016 Communacopia Conference in New York, Colao said Jio’s Months before Jio ripples dissipate Welcome Offerof free, unlimited 4G data and voice until end-2016 had “complicated” the market picture in India. Colao did not indicate when Vodafone is now likely to have sufficient confidence to enact the long-anticipated initial While emphasising his belief that VfIn can be “competitive” public offering (IPO), which is expected to see around with Jio, he said the promotion will “make it very hard to 10% of the OpCo’s equity put in play.