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Vodafone 2020 Analyst Summit: Evolution from Telco to Tech Communications Platform

30 Apr 2020
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Courtney Munroe, Ghassan Abdo, Denise Lund

In this market note

On February 12, 2020, Vodafone held its Industry Analyst Summit in London. Vodafone presented an overview of the company strategy and, over the course of two days, laid out its global business strategy. The main theme of the event was the focus on implementing a "digital first" customer engagement strategy while implementing a gigabit access infrastructure and 5G platform in its key European countries by 2025.

IDC's point of view

Vodafone had revenue of $48.5 billion in 2019; of which, 50% was derived from its consumer European operations, 20% from consumer operations in emerging markets, and 30% from its enterprise and SOHO business across the globe. The company has a presence in 25 countries on four continents, although its top 4 markets across Europe — Germany, United Kingdom, Italy, and Spain — account for 60% of its overall revenue. This event was in marked contrast to the last event held in 2018. The company has gained momentum in the provision of broadband and business services, and it is strikingly confident in its digital transformation efforts to date as well as its future road map.

Vodafone is a unique major global carrier, with major scale and concentration in key European markets and geographically disparate assets in other continents. The event was introduced by Nick Read, CEO of Vodafone Group, who noted that despite the enormous challenges facing the telecom sector, Vodafone   is well on its way transforming from a "classic" telco company to a "tech company," leveraging deep customer engagement across its consumer and enterprise target market. He also laid out Vodafone's ambitious goals for implementing Europe's largest 5G network and fastest local access with gigabit  access across the company's entire European footprint by 2025. In the consumer sector, Vodafone plans to further expand its digital platform by increasing its digital transactions, which has grown to 20% of   sales from digital channels, as well value-added digital applications to additional markets.

Vodafone's CTO Johan Wibergh, espoused further on these themes, providing an overview of Vodafone's technology strategy for the next five years: Tech 2025. The goal, or wish list, is massive automation, 90% digital interactions, and a single autonomous cloud architecture — a workforce led by software developers, leveraging repeatable APIs, and a sophisticated AI layer managed by a ubiquitous cybersecurity framework. In addition to the often-mentioned digital-first platform, a key goal is also to reduce complexing and foster simplicity as a prelude to agility and innovation. Vodafone is starting by solving the core connectivity issue of implementing gigabit access and 5G in Western Europe. The next stage is expanding to network adjacent competencies including IoT, value-added digital services such as M-Pesa, and the implementation of a multi-access edge computing platform. The goal of the latter is to reduce latency and improve application performance. The company already has an advanced broadband/5G platform, which is live in seven metro markets in Western Europe, with plans to expand to a total of 63 cities by 2025.

Vinod Kumar, CEO of Vodafone Business, noted that while Vodafone was late to the market with SD- WAN, this is currently a key driver of business growth for the company. SD-WAN revenue is currently growing at a CAGR of 71%, driven by diverse vendor option including Juniper, as well as Cisco and VeloCloud solutions. The IoT segment will remain a key focus for Vodafone, which is the market leader among telecom providers, with 99 million devices in service and over $1 billion in revenue. The company is currently in 37 markets and will continue to expand its use cases via its App-Invent marketplace. The goal is to move beyond connectivity to the provision of end-to-end solutions.

Vodafone Global Enterprise (VGE) CEO Ben Elms spoke to the go-to-market approach for multinational enterprises, underscoring that VGE is changing how it engages with customers in multiple ways as customer needs are changing. One example is VGE's development of vertical specialism, a strategy that appears to round out the end-to-end solution approach of which fellow executives spoke.

The most impressive segment of the event was Vodafone's deep-dive sessions, which showed that the company has made substantial progress over the past 18 months in several areas. Most notable is its current technology stack and analytic and AI capabilities that drive its product development and  service delivery. The company has progressed from proof-of-concept data and AI capabilities in 2018 to an internal platform that is a single source of all data and reporting operations in the company. This is then leveraged to sell solutions across IoT, security, and network services to over 100 customers today. It is leveraged for IoT solutions to reduce risks and operational costs with automated discovery of anomalous behaviors. The CyberSecurity unit has solutions to mitigate financial fraud. Its intent- based infrastructure enables enterprises to leverage Vodafone Analytics API to analyze network traffic and usage to provide a real-time recommendations on the best time to make onsite operations. Most notable to the success of this unit is the Vodafone Consulting unit, which focuses not just on consulting and design for onboarding services but also for cocreating innovative solutions with its customers. The company will continue to focus on IoT and extend its digital consumer platform including its mobile payment platforms, which currently has 50 million subscribers in emerging markets.

Vodafone's mobility segment of the event affirmed the company's commitment to investing in and advancing its mobility managed services and solutions for MNCs. Vodafone highlighted progress and road map items for MNCs that have both the business and its employees' needs in mind, including its Red Flex solution that enables businesses to share mobile device costs efficiently with employees where the device cost exceeds business rules, with Vodafone splitting the bill and payment processing. Also included in Vodafone's current and future investments will be a focus on mobility bundles, bundled telecom reporting, the expansion of its Device Lifecycle Management (DLM) service footprint to additional countries in the world, and a Leavers Service, which will address employees' managed mobile devices in cases where the employee is leaving the company. Further, Vodafone's Mobility team shared that the DLM portfolio of devices will be expanded beyond Apple and Samsung devices to include ruggedized devices and wearables.

Vodafone is actively pursuing opportunities in 5G MPN (mobile private networks) targeting industries such as mining and oil and gas. MPN provides for secure connectivity and the ability to provide coverage in remote areas with limited public coverage. IoT is a significant use case for 5G MPN as it promises to address the needs of low-latency applications, secure connectivity, and improved operational environments. 

Vodafone is additionally active in MEC (mobile edge compute). MEC promises to deliver low-latency applications based on a cloud consumption model. Vodafone is well positioned geographically in Germany, for example, with 8 points of concentration to address the low-latency needs of 90% of enterprises. Vodafone has established partnerships with cloud providers such as AWS and IBM to provide a more comprehensive MEC managed services portfolio. Vodafone believes video streaming is an important use case for MEC.

Vodafone is at the forefront of telecom companies leveraging APIs to help enterprises create customer engagement applications. It has assembled CPaaS capabilities in partnership with and leveraging Twilio, AWS, and Google to facilitate personalized customer engagement applications. The platform

slots into Vodafone's unified communications (UC) platform and offers voice, video, chat, and SMS APIs to enable customer experience applications. The company showed a demo that leveraged Google Voice AI in concert with several Twilio APIs and tools. The foundation is Vodafone's SIP, phone numbers, SD-WAN, and IoT gateway connectivity platform. This is an interesting area to watch for future developments at Vodafone.

Related IDC Research

  • Key Carrier MEC Themes Emerge in Verizon and Vodafone Announcements at AWS re:Invent (IDC #lcUS45126120, December 2019)
  • Big Red Sale Out of the Blue: Vodafone NZ Ownership Change means Shift to New Zealand Centric Strategy (IDC #lcAP45074719, May 2019)

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