Vodafone on course
With news appearing on The Telegraph website that Vodafone have received a long awaited dividend of £2.8 billion from Verizon – its US joint venture – it seems the mobile phone giant is ready to take a big stride in the market once again. Vodafone has not received any dividends since 2005, a problem that has not allowed the operator to grow its business as much as it wanted to over the past six years.
Shares in Vodafone have risen 5.53% since the announcement with many pundits expecting this to rise even further in the coming weeks. The dividend will prove to be a big relief for many high street Vodafone retailers whose fortunes have been looking increasingly grim over the past year. The recession had not been kind to the retail sector and many mobile phone operators have been closing stores to reduce costs, transferring a good portion of their sales online. The dividend will allow many shop workers to breathe a sigh of relief as Vodafone will now be looking to invest in the business rather then strip assets. Considering that only four months ago share prices in the company had dropped following worries over its deal with Daisy Distribution, one has to admire Vodafone’s strategy.
Financial experts have been speculating on what kind of changes will come in now that Vodafone had more to invest. Many agree that with the new Ofcom ruling taking effect in the UK partnering a European ruling on high mobile roaming charges, Vodafone would do well to consider adjusting their marketing to attract more business and personal travel users. By reducing the roaming prices sooner rather then later, Vodafone could get a jump on its competitors and snatch away custom from 02, Orange/T-Mobile and many others. As Chief Executive Vittorio Colao has only just announced the dividend, it will be a few weeks before more concrete information over Vodafone’s strategy becomes clear.
In the meantime other phone operators are beginning to look over their shoulders. With Orange and T-Mobile now owned by the same company, concern over Vodafone’s stance won’t be in the higher realms yet, but they will be watching closely in the coming months. 3 have been relatively quiet since the announcement and have yet to make a comment. 02 have got other things to worry about with pressure to cease advertising with Newscorp outlets on the increase following the mobile phone hacking scandal which has dogged the Murdoch owned group in recent months.
Whilst this is all going on, smaller service providers and operators have already begin their assault on stealing market share with companies like abroadband taking advantage of the current gap over roaming charges. Changes in law and an unstable economy should prove to be a test for the mobile phone industry in the coming months, but it looks like Vodafone have placed themselves in a good position.
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