Vodafone's 'Long Term' hesitance

Roger O. Crockett
23 Apr 2008

As the wireless industry presses ahead with plans for a next-generation wireless technology, one key player keeps dragging its heels. Indeed, on April 14, several dominant wireless companies agreed to a licensing framework for patents addressing the emerging technology, known as Long Term Evolution (LTE). The companies, including handset maker Nokia (NOK) and network equipment maker Ericsson (ERICB), join major wireless operators including Verizon Wireless and China Mobile as supporters for LTE, a technology widely seen as an on-ramp to truly speedy mobile Internet connections. If it lives up to its billing, LTE would make today's cable and DSL modems"”as well as the '3G,' or third-generation, mobile networks wireless carriers have spent billions to deploy"”seem downright snail-like.

But conspicuously absent from this LTE confab has been Vodafone (VOD)"”the world's largest wireless service provider, and thus the company that buys the most mobile phones from the likes of Nokia and strings the most territory with network gear from Ericsson and others. 'We announced a month ago with Verizon Wireless and China Mobile that we are going to press for development of the LTE standard,' Vodafone CEO Arun Sarin told BusinessWeek in a recent interview. 'But we have not said we are definitely going to LTE.'

And yet, Sarin wants to make two points crystal clear: Despite his noncommitment to LTE, Vodafone is not a technological-age laggard, and it is not blindly locked into serving Europe. Rather, the gargantuan wireless company is branching aggressively into emerging markets such as Latin America, India, and Africa. Of Vodafone's globe-leading 250 million subscribers, 40 million customers are located in these distant markets, and that segment of the customer base is growing by 20 million a year, he notes.

And though Vodafone has been criticized for not being a 3G leader in its native European lands, it's pushing the service in new regions. Because broadband Internet access has been slower to arrive in these emerging markets, 'most of the people there will feel and touch and play with the Internet on their phones as opposed to a PC,' Sarin says. 'So in the long term the size of the Internet market for us in these places is going to be at least as large as it is in developed markets.'

Here are excerpts from Sarin's conversation with Roger O. Crockett, BusinessWeek telecom correspondent and Chicago bureau deputy manager.

What evidence is there that your mobile Internet business is truly taking off‾

There are some interesting statistics: Our data business"”not voice, not text messaging, but data"”is now a $4 billion business growing at 40% a year. So if you compound those numbers, they start to get pretty heady for any size company. Even though our [revenue] numbers are in the $60-plus billion a year range, $4 billion is still a lot."&brkbar; So our data story is real and getting traction.

Vodafone and others have met criticism for investing a whole lot of money buying new wireless spectrum licenses for 3G networks. What sort of return are you getting‾

Let's put it right out on the table right up front. We would not pay $6 billion now for what we paid for in 2000 and 2001. We overpaid. There is no question about that. But that is behind us. The only question that is relevant is incrementally what are we investing in hardware and software and handsets.

Related content

No Comments Yet! Be the first to share what you think!