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Vodafone Extends Euro Reach

Vodafone Group plc (NYSE: VOD) reaffirmed its position as the most powerful mobile operator in Europe today by announcing a non-equity partnership that will take its brand into Austria, Croatia, and Slovenia (see VOD Partners for E Europe).

The "Partner Network Agreement" with Mobilkom Austria AG & Co. KG, the wireless business of Telekom Austria, will see Vodafone's brand used to promote international services by Mobilkom in Austria (2.94 million customers in September 2002, a 43 percent market share), VIPnet in Croatia (1.02 million subscribers, 47 percent market share), and Simobil in Slovenia (300,000 customers, a 22 percent market share). The combined 2001 revenues of the three operators was nearly €1.7 billion (US$1.77 billion).

In addition to having majority or part ownership of mobile operators in 28 countries (17 in Europe), Vodafone now has partner agreements in seven countries -- the three announced today plus Denmark, Estonia, Finland, and Kuwait -- giving it a presence in 35 countries in total (23 in Europe).

"It is incredibly impressive," says Alastair Brydon, director of research at consultancy Sound Partners. "Vodafone seems to have many of the top operators in the main countries worldwide as part of its group, and it is using the power of its brand to do this." (See Clash of the Titans and Vodafone's Data Barometer.)

The deal with Mobilkom will see it introduce Vodafone international services, namely "Vodafone Eurocall, Assisted Roaming, Virtual Home Environment, Pre-paid Roaming, Pre-paid Roaming Top Ups, and GPRS Roaming" in the three countries. This will allow Vodafone customers to use their Vodafone Live! and Mobile Office services in those countries.

With footholds already in Albania, Greece, Hungary, Poland, and Romania, Vodafone is now building itself a sizeable presence in Central and Eastern Europe, an area that looks to be a new battleground for subscribers. "Eastern Europe is very important for the future," says Brydon. "Many of the existing markets in Europe are either saturated or approaching saturation, and there are few places left where there is scope for expansion. Mobile communication is becoming more accepted and is gaining subscribers, as the fixed infrastructure in many Eastern European countries is weak."

The operator with the strongest presence in the region is one of Vodafone's pan-European rivals, T-Mobile International AG (see Not Russian Into a Sale).

So will there be further agreements in this region, for instance in the Czech Republic? "I don't think we have expressed a preference about a position in the Czech Republic," says Bobby Leach, Vodafone's head of group financial media relations, "but given the spread of interest in the [East European] area [a presence of some kind is] a possibility. But you know what we're like -- we never talk about our future plans," he adds without a hint of sarcasm.

— Ray Le Maistre, European Editor, Unstrung
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