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Vodafone Business: from telco to tech comms

11 Mar 2020
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Melanie Posey

Like other telcos busy reinventing themselves to compete in the software-defined digital transformation era, Vodafone continues to revamp its operations with a view toward efficiency and agility while developing a differentiated, technology-driven value proposition that leverages key 5G, IoT platform and edge capabilities.


Vodafone, like other telecom-heritage companies, continues its efforts to pivot from being ‘just a telco,’ through digital transformation of its operations, customer engagement/experience, and services development processes. At its recent industry analyst summit in London (focused on the Vodafone Business segment), the company highlighted its progress toward the goal of becoming a digital service provider. Integration of previously siloed network and IT operations is ongoing; nearly 60% of its core IT has been moved to cloud environments, and standardized ‘digital first’ approaches to marketing, customer management, platform and solution development, and overall customer experience are being embedded into the business and overall culture.

As the next phase of reinvention begins under Vodafone Business’ new CEO Vinod kumar (formerly group CEO of Tata Communications), the company is poised to put considerable effort (and investment) into the strategic pivot from ‘classic telco’ to technology communications (‘tech comms’) company. Vodafone Business, which currently accounts for about 30% of Vodafone Group’s €46bn ($50bn) revenue for fiscal year 2019, is being positioned as the growth driver and innovation engine for the entire group, raising the profile (and the stakes).

451 Take

As part of its ‘telco to tech’ evolution, Vodafone plans to jump-start the transformation process by positioning networking as an enabling foundation for digital business offerings. Leveraging its experience and expertise in mobility, 5G, IoT and SD WAN, the company is betting that automation and industrialization of networking in the form of scalable platforms will attract both the IT and application/developer partners and digitizing enterprise customers needed to drive the use cases for business models incorporating multi-access edge computing and low-latency applications. As cloud, IoT and networking converge, partnerships offer Vodafone the opportunity for scale- oriented growth and expansion via business-outcomes focused end-to-end industry platforms. Telcos and other service providers with legacy value propositions would do well to accelerate their efforts to digitize their business operations, ‘platformize’ their core offerings, and work with partners to execute on the (long-awaited) promise of network/IT convergence.

Becoming a ‘tech comms’ company

Vodafone Group began its journey to digital a few years ago and continues to execute on company- wide operating model transformation – essentially engineering its way out of its telco legacy in favor of in-house, DevOps-driven development of scalable platforms for back-end processes, product/service development and customer experience.

The company acknowledges that although fixed connectivity revenue is still growing and yielding decent profits, survival requires moving beyond connectivity and up the stack. To move beyond the classic telco mode of competition (bundling and packaging), Vodafone is focusing on platforms and partnerships as the way forward. A major part of the ongoing effort to better integrate the service portfolio (connectivity, 5G, IoT, Cloud) involves platforms with open interfaces and cloud-native support for such things as managed IoT, IoT application enablement and edge computing that allow Vodafone to build new products and services and co-create end-to-end platforms (hardware + connectivity +applications) with its technology partners and customers.

Vodafone asserts its right to play and lead in areas where technology and communications intersect. The venture with IBM is a key piece of the puzzle, with Vodafone delivering foundational 5G, IoT, SD WAN and mobile private network capabilities and IBM contributing hybrid/multicloud advisory, operations and management services. In addition to IBM, other companies such as AWS and Microsoft will be important partners in developing customer-led industry-specific offerings for multi-access edge computing. Through an agreement with AWS, Vodafone will bring AWS wavelength to Europe, beginning with the UK and Germany.

Vodafone expects its partnership efforts to yield a range of applications and end-to-end offerings such as connected worker, connected asset, site security and workplace safety. The verticals targeted for co-creation partnerships and platform-based development are manufacturing, insurance, retail, energy/utilities, automotive and transport/logistics.


Vodafone faces competition from other telecom-heritage companies with similar approaches to internal and customer-facing digital transformation and ambitions to move beyond connectivity toward converged network/IT/applications platforms. The IBM venture puts the company in a better position to compete for strategic business-outcomes-oriented opportunities involving Cloud, IoT and edge capabilities into industry-specific offerings, But other major telcos (as well as the IT providers) are also crowding into this space.

Key competitors in Vodafone’s key European enterprise services (fixed and mobile) markets include Telefónica and Orange in Spain; BT (domestic and global enterprises), along with BT-EE and O2 on the mobile front in the UK; Interoute (now owned by GTT) and Deutsche Telekom in Germany; and Telecom Italia in Italy. Cloud and IT services competitors include DXC, Accenture, Capgemini, Centurylink, Ensono and Rackspace.

SWOT Analysis


Vodafone’s internal transformation efforts, its 5G and IoT expertise and assets, and the venture with IBM position the company to monetize its network and edge architecture and establish a more strategic role as technology/industry platform provider.


Like other telco-heritage companies, Vodafone must convince enterprises (and potential partners) of its bona fides as a ‘beyond connectivity’ provider/ecosystem for digital business offerings.


The IBM venture will be a key vehicle via which Vodafone drives growth and deepens existing customer relationships. Vodafone’s expertise in (and increasing industrialization of) SD WAN, 5G, IoT and edge computing.

– combined with IBM’s market breadth, credibility and vertical reach – gives Vodafone greater permission to engage with customers in a more end-to-end, business-outcomes- focused manner.


Vodafone, like other telcos, is seeking to replace its telecom heritage with a more IT- oriented approach to running the business. However, success depends on continued internal operations transformation and the pace at which new business opportunities for 5G, IoT and edge computing emerge, and the extent to which Vodafone can corral customers and partners (particularly application developers) to its platforms.

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This report, licensed to Vodafone, developed and as provided by 451 research, llc, was published as part of our syndicated market insight subscription ser- vice. It shall be owned in its entirety by 451 research, llc. This report is solely intended for use by the recipient and may not be reproduced or re-posted, in whole or in part, by the recipient without express permission from 451 research.

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