Vodafones(LSE: VOD) (NASDAQ: VOD.US) turnaround is far from complete; in fact, it has really only just started but the companys management appears determined to return the company to growth.
Management is chasing growth by trying to make Vodafone the best at what it does. Indeed, across mainland Europe Vodafone is spending billions to upgrade its network and make it the best available, with the fastest transmissions and widest coverage. The company is also pursuing the same strategy here within the UK.
Home comforts
Vodafones sales have been falling the UK for many years now and the company has finally decided to do something about it. Actually,profitability within the UK is among the lowest in mainland Europes dire economic situation . The company blamescompetition, regulation and the economic downturn for this poor performance within the UK.
So, Vodafones new UK chief executive has set out to change this. Jeroen Hoencamp, Vodafone UKs CEO, has decided that the company will now develop a best-in-class network provider, offing unrivalled service across the country.
A key part of this strategy will be the provision of fixed-line broadband services, along with the companys current mobile offering. Whats more, Vodafone UK will target business users and boost itsenterprise business, which will use fixed-line networks as Vodafones business interests are not just limited to mobile telecommunications. All in all, the group is now focused on a network first style growth strategy, building the best network to outperform peers and gain a reputation for reliability and quality of service.
This focus will see Vodafoneprovide mobile access for the first time to 100 communities across the UK by using high-spec femtocell technology, which means that only small base stations are required to provide 3G access. Further,Vodafone is planning to spend 1bn revamping its mobile network across the UK this year, connecting 259cities and towns, as well as thousands of smaller communities to its 4G network.
Part of a bigger plan
Vodafones spending within the UK is part of a wider, European spending drive to dominate the continents mobile telecommunications industry. As you may know, this project has been nicknamed Project Spring, a 19bn infrastructure project that will allow Vodafone to out manoeuvre its competitors.
Just like the companys UK plans, Project Spring will see Vodafoneupdate its entire network across the continent, giving European customers unprecedented 4G access. According to the companys own forecasts,Project Spring will generate an additional 1bn in free cash flow per annum for Vodafone, from 2019 onwards.
Only time will tell
Still, only time will tell if Vodafones plan to become the best will pay off. However, Vodafones investors are being paid to wait, as at present levels the company currently offers a dividend yield of 5.4%.
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Rupert does not own shares in Vodafone.
