Vodafone Deepens Ties With Verizon

Vodafone Group plc (NYSE: VOD) reported profit of £7.87 billion (US$12.8 billion) for the financial year ending March 31, down 8.7 percent year-on-year due to one-time charges against a number of its European operations. (See Vodafone Reports Full Year.)

Ever mindful of its global strategy, however, the mobile giant announced its intention to deepen its relationship with Verizon Wireless , in which it holds a 45 percent stake.

First, though, the financial highlights. While Vodafone gained £5.3 billion ($8.6 billion) from a tax case settlement and asset sales in China and Japan, it recorded goodwill impairment charges of £6.1 billion ($9.94 billion) against the value of its operations in Spain, Greece, Portugal, Italy and Ireland. (See Vodafone Sells Softbank Holding and Transform More Than Your Data Center: Transform Your Value to the Business.)

Group revenues, though, were up by 3.2 percent to £45.9 billion ($74.8 billion) due to strong growth in the Africa, Middle East and Asia/Pacific (AMAP) region.

Data revenues are up 26.4 percent year-on-year to £5.1 billion ($8.3 billion), representing 12 percent of total group revenues.

Vodafone's share price gained 2 percent to reach 171.75 pence in morning trading on the London Stock Exchange as the results were slightly better than analysts had expected.

But any shareholders hoping for a near-term windfall from the sale of Vodafone's stake in Verizon Wireless should now put that idea aside, as the two operators are strengthening their relationship. Vodafone said the pair are to work together to "address the global enterprise market, target procurement savings and develop technology standardization," a move that could boost revenues, reduce costs and lead to speedier service creation.

The two companies have already worked closely on new technology developments, having formed a machine-to-machine (M2M) strategic alliance in 2010 and been members of the Joint Innovation Lab (JIL) that is now part of the Wholesale Applications Community (WAC). (See Vodafone, Verizon Team for M2M, WAC Beefs Up Its App Pack , Verizon Joins Widget Initiative and Mobile Giants Team Up.)

— Ray Le Maistre, International Managing Editor, Light Reading

digits 12/5/2012 | 5:05:12 PM
re: Vodafone Deepens Ties With Verizon

The devil will be in the detail -- the impact on the services market could be significant if Verizon Business and Vodafone's global operations can pull together some attractive international services packages for enterprise users. And joint procurement developments?

That could provide another hit to vendor margins and make it even harder for the Tier 2 vendors to compete with the largest players.

All a big 'if' though 

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