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Vodafone Upheaval Continues

Ray Le Maistre
10/16/2006
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The executive name-plate changer at Vodafone Group plc (NYSE: VOD) must be working overtime these days as the global wireless carrier seems intent on changing its top team more often than teenagers replace their handsets.

The latest big name packing his personal items into a cardboard box is Thomas Geitner, the former Vodafone CTO who became head of the carrier's New Businesses and Innovation Unit on May 1, with responsibility for the Mobile Plus strategy. (See Vodafone Shuffles the Deck.)

The aim of the unit was to "focus on converged and IP services in order to deliver new revenue streams as Vodafone seeks to provide innovative services to its customers," a critical area of development for any large mobile operator.

But Geitner is leaving at the end of 2006, and will not be replaced. In addition, the Innovation Unit is being scrapped, with its activities, including those related to the carrier's entry into fixed broadband, devolved into "parts of the organization closer to the customer," says Vodafone. (See Vodafone's Board Changes.)

Vodafone says this move will simplify its business. The Innovation unit was one of only three principal business units, so now it has just two: "Europe" for the carrier's business in Western Europe, and "EMAPA" (Eastern Europe, Middle East, Africa, Asia/Pacific, and affiliates), which manages all other territories, including emerging markets. (See Vodafone Unveils New Strategy.)

The shakeup doesn't appear to be the result of disappointment with the Mobile Plus strategy. Following a recent briefing about Vodafone's business in Italy and Spain, analysts were positive about the impact of Mobile Plus, and about Vodafone's prospects in general. The team at Lehman Brothers stated in a recent research note that Vodafone has "made good progress with its Mobile Plus strategy over the last few months" by launching new services for retail and enterprise users, including wireless and fixed broadband. (See Vodafone Uses Ericsson HSDPA, Vodafone UK Offers DSL, and Vodafone Italy Uses Lucent.)

And the swift decision to close the unit makes sense, reckons Ovum Ltd. analyst John Delaney. "We think that closing the Innovations division is the right move. It always felt a bit odd," he writes in a research note, adding that focus areas such as fixed/mobile convergence and mobile advertising "vary so much by country that working on them at a centralized, global level seems like the wrong approach."

The Mobile Plus strategy is now the responsibility of the Europe unit, headed by Vittorio Colao (we'll come back to him in a minute), while the development of "new business opportunities and key partnerships" will be the responsibility of a "Group Strategy and New Business" function that is the responsibility of Alan Harper. That makes sense, as Harper is already Vodafone's director for Group Strategy and Business Integration.

Geitner's departure isn't the only change in Vodafone's personnel roster in the past year, a period that has seen the carrier's share price slip more than 11 percent on the London Stock Exchange to 130 pence today.

And the revamp hasn't been restricted to the carrier's staff list. The mobile giant -- 2005 revenues of £29.4 billion (US$54.6 billion) and 187 million customers (US187 million) as of June 2006 -- has undergone a dramatic overhaul of its global portfolio, service offerings, and partnerships in the past year. (See Vodafone Posts Results.)

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