IV - Interviewer
VC - Vittorio Colao
IV - In summary, how do you think Vodafone performed in 2011/12?
VC - 11/12, Vodafone has got what I would call a steady performance. We have held or gained market share in most of the markets. We have done relatively well in a difficult context in Europe. Very well in emerging markets: India, South Africa. We keep growing on data, both in emerging and in mature markets, and we have continued to implement our cost measures, leveraging our scale, and on the set-up of Vodafone as an international company.
The performance in Europe has been, I would say, good, but clearly we have a difference between the northern countries – Britain, the Netherlands, Germany – where we have done well in an easier economic context; and the southern European countries – Greece, Italy, Spain – where clearly the crisis is hitting the industry, not just Vodafone. Then, of course, Verizon Wireless. Verizon Wireless continues to be a great company, has got fantastic performance. The last quarter especially was very good, continues to be the leader in technology with LTE, the leader in customer service and, I have to say also, a very profitable company. So, the US is clearly another productive area for Vodafone.
IV - What are Vodafone’s priorities for this coming year?
VC - Our strategy for next year is to basically continue what we have been doing in the last two years. First of all, very important: data. Data as in smartphones. Smartphones are clearly becoming the device that everybody wants to have, both in mature and in emerging markets, and support this with a good and a powerful network. It’s, of course, enterprise, and enterprise we are leading in the large international segments with Vodafone Global Enterprise, but also at the local level with unified communication products like One Net, and with a very strong sales for us in the SME and SoHo segments. And, of course, we need to continue to work on our costs, and this is a type of Vodafone leveraging on our international technology capabilities. So, unified data centres, international backbone network and, in general, leverage on our scale in order to reduce the cost base.
All over, the above is, of course, particularly important for emerging markets, where data is not just smartphones, it’s simply connectivity: the only way that our customers there have to connect. Of course, help the growth of those countries in the consumer and in the enterprise sectors; we have an emerging enterprise business, also in emerging markets. And, continue to work with very efficient cost structures, given the price levels in emerging markets.
IV - What are the challenges Vodafone is facing?
VC - We are prepared in this coming financial year to face, I would say, three types of challenges. The first, most obvious, is the economic situation in Europe which, of course, requires a lot of discipline on cost, on capital allocation and on everything we do everywhere. The second is regulatory challenges. Mobile termination rates continue to be cut, I believe too much, but this is what it is. Roaming regulation, also regulation in some countries like India, which has a particularly difficult regulatory environment. And the third one is the usual price competition that we have everywhere, sometimes healthy, sometimes very aggressive; but, this is more business as usual. I would say economic backdrop, regulation and price competition are the things that we are bracing for.
IV - What are your objectives for 2012/13?
VC - Our objectives for 2013 are four. The first one is to get, what I would call, value share; not necessarily market share, but value share in the markets where we operate. The second is clearly to continue to grow in data, both in emerging and in mature markets. We expect good growth in data. We have equipped our network and our technology to cope with it, without any major shock or disruption. The third is to continue to reduce our cost basis, and leverage on our international set up to allow our pricing policies to be implemented and to have an efficient cost position. And fourth, to continue to generate cash flow, be shareholder friendly in everything we do, capital discipline and intelligent allocation of our shareholders’ money.