Vodafone Group PLC

Company Profile

Publication Date: 10 Apr 2009

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TABLE OF CONTENTS

TABLE OF CONTENTS

Company Overview..............................................................................................4
Key Facts...............................................................................................................4
SWOT Analysis.....................................................................................................5

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Vodafone Group PLC
Company Overview

COMPANY OVERVIEW

Vodafone Group is one of the world’s leading providers of mobile telecom services. The group
provides mobile voice and data communication services to consumers and enterprise customers.
The group has global operations spanning Europe, the Middle East, Africa, Asia Pacific, the US,
and the UK. It is headquartered in Berkshire, the UK and employs 72,400 people.

The group company recorded revenues of £35,478 million (approximately $71,224.9 million) during
the financial year ended March 2008 (FY2008), an increase of 14.1% over 2007. The operating profit
of the group was £10,047 million (approximately $20,170.2 million) in FY2008, as compared to an
operating loss of £1,564 million (approximately $3139.9 million) in 2007. Its net profit was £6,660
million (approximately $13,370.5 million) in FY2008, as compared to a net loss of £5,426 million
(approximately $10,893.1 million) in 2007.

KEY FACTS

Head Office Vodafone Group PLC

Vodafone House
The Connection
Newbury
Berkshire RG14 2FN
GBR
Phone 44 1635 33 251
Fax 44 1635 45 713
Web Address http://www.vodafone.com
Revenue / turnover 35,478.0
(GBP Mn)
Financial Year End March
Employees 72,375
New York Ticker VOD

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SWOT Analysis

SWOT ANALYSIS

Vodafone Group is one of the leading providers of mobile telecom services in Europe, the Middle
East, Africa, Asia Pacific and the US. The group enjoys a strong recognition for its brand Vodafone.
Significant brand recognition provides a competitive advantage to the group as well as allows it to
effectively penetrate new markets. However, intense competition in the telecom market could affect
the operating performance of the group in coming years.

Strengths Weaknesses

Strong brand building policy Legal proceedings

Extensive global reach and diversified
revenue base
Leading market position

Opportunities Threats

Agreement with Telefonica Intense competition

Positive outlook for mobile advertising Matured markets
Increasing 3G penetration High regulation

Strengths

Strong brand building policy

Vodafone Group has developed strong brand building policy over years. The group’s mobile
subsidiaries in Europe, Central Europe/Africa region and Asia Pacific, and the joint venture in Italy
operate under the brand ‘Vodafone’. The group focuses on delivering differentiated customer
experience through its brand and communication activities. It has also introduced a new marketing
framework across the business, which includes a new vision of expanding the group’s category from
mobile only to total communications. Further, its brand and customer experience continues to
implement Vodafone’s strategy of customer satisfaction. The group’s brand function has also
developed a methodology for competitive local market brand positioning, with local brand positioning
projects implemented in various markets. It has also developed a set of guidelines, to enable the
consistent use of the Vodafone brand, in areas such as advertising, retail, online and merchandising.

The group has been implementing global retail design since 2006. One of the examples of its branding
activity includes the rebranding of Hutch to Vodafone in India, following the acquisition of interests
in Hutchison Essar, India in 2007. Vodafone Group started its brand campaign as ‘Hutch is now
Vodafone’. The migration from Hutch to Vodafone was one of the fastest and most comprehensive
brand transitions in the group’s history. The rebranding exercise encompassed over 400,000 multi

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SWOT Analysis

brand outlets, over 350 Vodafone stores, over 1,000 mini stores, over 35 mobile stores and over
3,000 touch-points. The group claims that over 60% of the transition was completed within 48 hours
of the launch, which was a significant achievement.

Further, the group regularly conducts Brand Health Tracking, a program designed to measure its
brand performance. Moreover, an external accredited and independent market research organization
provides global coordination of the methodology, reporting and analysis for the group. As a result
of these activities, the Vodafone brand is recognized around the world. It was also ranked number
11 in the BrandZ Top 100 global brands list in 2008, published in The Financial Times, with an
estimated value attributable to the brand of $37 billion, an increase of over 75% in 2007.

Strong brand building initiatives have given Vodafone significant brand recognition that provides a
competitive advantage to the group as well as allows it to effectively penetrate new markets.

Extensive global reach and diversified revenue base

The group has strategically expanded its presence across the globe through acquisition of stake in
various companies and partner networks. At the end of 2008, the group was one of the world's
leading international mobile telecommunications companies, with equity interests in 27 countries
and partners in more than 40 countries. Vodafone had approximately 289 million proportionate
customers worldwide at end of 2008. The group has significant mobile operations in Europe, the
Middle East, Africa, Asia Pacific and the US.

In addition, the company has a diversified revenue base. For instance in FY2008, the group’s largest
geographical market the UK, contributed 15.2% to the total revenues. This was followed by Germany
(14.9%), Spain (14.1%), Italy (12.4%), and other Europe (12.8%). Its revenues from the Middle East,
Africa and Asia contributed about 12.8%, while Eastern Europe contributed 8.8%. Arcor, Vodafone’s
fixed line subsidiary in Germany and now part of Germany business, contributed for 4.4% and Pacific
region accounted for 4.6%.

The group’s global reach along with diversified revenue base reduces its business risk, while providing
synergies associated with multinational telecom operations like roaming facilities and international
call charges, among others.

Leading market position

Vodafone Group is a leading player in most of the markets it operates. The group operates in Europe,
the Middle East, Africa, Asia Pacific, and the US through its subsidiary undertakings, joint ventures,
associated undertakings and investments. At the end of year 2007, it had considerable market share
in most of the countries it operates. In the European region, its operations in Germany have a market
share of 35%, Italy (33%), Spain (31%), Romania (39%), Turkey (26%) and the UK (24%). In the
Middle East, Africa and Asia Pacific regions, the group has market share of 48% in Egypt and India
(18%). Further, in the US, its partner has a market share of 26%.

Strong market share enhances the operating performance of the group.

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SWOT Analysis

Weaknesses

Legal proceedings

Vodafone Group is part of various legal proceedings related to tax issues. A subsidiary of the group,
Vodafone 2, is responding to an enquiry by HM Revenue & Customs (HMRC) with regard to the UK
tax treatment of its Luxembourg holding company, Vodafone Investments Luxembourg SARL, under
the Controlled Foreign Companies section of the UK’s Income and Corporation Taxes Act 1988
(CFC Regime) relating to the tax treatment of profits earned by the holding company for the accounting
period ended 31 March 2001. This issue is yet to be solved, as Vodafone 2 appealed the decisions
to the High Court and this appeal was heard in May 2008. As a result, the group had taken provisions
for the potential UK corporation tax liability and related interest expense, which amounted to
approximately £2.2 billion (approximately $4.4 billion) at end of FY2008.

Additionally, Vodafone Essar Limited (VEL) and Vodafone International Holdings (VIH) each received
notices in 2007, from the Indian tax authorities alleging potential liability in connection with alleged
failure by VIH to deduct withholding tax from consideration paid in the transaction to Hutchison
Telecommunications International Limited (HTIL). The notice was issued in respect of HTIL’s gain
on its disposal to VIH of its interests in a wholly-owned subsidiary that indirectly holds interests in
VEL. Following the receipt of the notices, VEL and VIH initiated a legal proceeding, which is pending
outcome. In March 2009, BSNL, a government owned telecom company in India, issued a notice
threatening to disconnect VEL from its network following a dispute over payments of access deficit
charge and other for allegedly routing of international calls by using local numbers. However, Telecom
Disputes Settlement and Appellate Tribunal (TDSAT) stayed the disconnection notice issued by
BSNL in April 2008.

The group’s involvement in various legal proceedings related to tax issues, could subject it to fines
as well as affect its brand image.

Opportunities

Agreement with Telefonica

Telefonica and Vodafone entered into an agreement for sharing their mobile network assets across
selected European operations in March 2009. As part of the agreement, the companies would share
their network infrastructure in Germany, Spain, Ireland and the UK with discussions ongoing in the
Czech Republic. Further, the companies are exploring potential savings in related areas. The
agreement reduces both capital and recurrent expenditure for both the companies. It is also anticipated
to result in cost efficiencies of over £100 million (approximately $200 million) for each company over
10 years. Moreover, the agreement would also reduce the environmental impact of both companies’
roll out activities, due to the consolidation of existing sites and joint build of new sites.

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SWOT Analysis

Vodafone Group’s agreement with Telefonica would enhance its operating performance in coming
years.

Positive outlook for mobile advertising

The mobile advertising market is forecast to record strong growth in coming years. With mobile
phone becoming the center of the digital convergence, advertising on mobiles would be a major
growth area of growth for telecom players. For instance, mobile advertising and search revenues in
the US alone were forecast to record a compounded annual growth rate of over 70% during
2008–2013.

Vodafone Group has been focusing on mobile advertising in recent times. It has working on various
business models in this area, including targeted demographic advertising through display and search
advertising, and entered into agreements with over 40 leading brands. Positive outlook for mobile
advertising would contribute to the revenue growth of the group in coming years.

Increasing 3G penetration

The adoption of third generations (3G) technology has been increasing in recent years. The 3G
technology allows services providers to provide a host of services including high speed mobile
broadband, mobile TV, and mobile VoD, among others. As the traditional voice revenues of mobile
operators are being hit by changing tariffs, increasing competition and alternative technology, among
other factors, operators are migrating to 3G services to facilitate stable or increasing average revenue
per user (ARPU). As a result, the worldwide 3G penetration rates are forecast to increase in coming
years. For instance, the 3G penetration rates in advanced economies like the US and Western
Europe, are forecast to increase from nearly 30% in 2008 to over 60% by 2013.

Vodafone Group is one of the leading players in the world wide telecom market. The group offers
3G services based on the Wideband Code Division Multiple Access (W-CDMA) technology. Further,
the group expanded its service offering on 3G networks with high speed internet and email access,
video telephony, full track music downloads, mobile TV and other data services in addition to existing
voice and data services. At the end of FY2008, it has 3G licenses in Germany, Italy, Spain, the UK,
Greece, Ireland, Malta, Netherlands, Portugal, Australia, Czech Republic, Egypt, Hungary, New
Zealand and Romania. Moreover, it is actively driving additional 3G data technology, including
evolutions of High Speed Packet Access (HSPA) technology to upgrade both the downlink and uplink
speeds.

Increasing adoption of 3G would contribute to the group’s revenue growth in coming years.

Threats

Intense competition

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SWOT Analysis

Vodafone Group operates in the highly competitive and rapidly changing technology-based
telecommunications industry. The essence of marketing in many of the group’s markets is shifting
from customer acquisition to customer retention, due to the highly penetrated markets. The group
competes with national and international players and Mobile Virtual Network Operators (MVNOs) in
various markets. Major competitors of the group are France Telecom, T-Mobile, Sprint Nextel
Communications, Hutchison, and Telecom Italia. Intense competition increases the churn rates and
affects the pricing strategy of the groups’ charges for its mobile services. Further, competition would
also require the group to increase subsidy for handsets.

Increasing competition may adversely affect the group market share and revenue growth.

Matured markets

The European markets, where the group has significant presence and generates considerable
revenues, have high penetration rates. The penetration rates in Germany, Spain, Italy and the UK
are estimated to be 130%, 112%, 142.7%, and 137% respectively, at the end of FY2007. High
penetration rates indicate that majority of the population are using the telecommunication products
and services.

Mature markets curb further growth and lead to saturation. This limits the company from gaining
incremental revenues from these markets.

High regulation

Telecom operations are highly regulated by both national and EU authorities. These regulations
continue to have a significant impact on the telecommunications sector. For instance, approximately
20% of the group’s revenues are directly subject to regulation, mainly related to termination rates
and international voice roaming. The competitive environment is also impacted by regulations in a
number of areas, including the allocation of radio spectrum, the provision of network access to third
parties and network sharing. As regulations are anticipated to intensify in coming years, the group’s
operations could be affected.

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