Emerging markets too pricey, says Vodafone chairman

Having reported disappointing performances from its highly-penetrated European markets, Vodafone was able to salvage its reputation with strong growth from its investments in developing markets such as Turkey and India. However, the company's chairman, Sir John Bond, stated this week that breaking into these fast-growing countries--naming Russia and Brazil as potential targets, was proving to be increasingly difficult. "There is nothing for sale, and it would be a big challenge for us to agree to a price that would be beneficial to the shareholders. We find price expectations in these markets are quite high."

However, Vodafone's new CEO, Vittorio Colao, clearly wanted to follow his predecessor, Arun Sarin, by focusing on emerging markets with the hope that a deal could be struck shortly to acquire a majority holding in South Africa's Vodacom. The likelihood of this coming to fruition has moved closer over the last few days with the announcement from Vodacom that it has signed an agreement to bring on board a number of black investment groups as part of the country's move to increase black economic empowerment. Vodafone would have to have added black investors to its deal and Vodacom's move means any deal should progress more smoothly, with the new investors retaining their shareholdings.

Speaking about the financial difficulties consumers are facing, Colao said that these economic challenges will need to be understood and new initiatives launched. "I don't think these issues will slow us down, but times change and we need to do things slightly differently. If families feel constrained we are going to give more SIM-only deals, lower prices, maybe less fancy handsets and maybe the handset renewal times will be pushed a little bit further."

For more on this story:
- go to the Financial Times and Guardian

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