Vodafone CEO details 'Supermobile' strategy to mimic Amazon

Vodafone CEO Vittorio Colao used the reporting of the operator's full-year results to quietly outline the company's direction for the next three years.

Colao said its plan, dubbed "Vodafone 2015: Supermobile strategy," includes replicating the success of online retail giant Amazon in terms of customer service. "Vodafone wants to be the Amazon of telcos," not in terms of selling but rather top-class customer service, Colao told reporters at a briefing, according to the Wall Street Journal.

In line with that Vodafone will be refurbishing 75 per cent of its 2,200 retail outlets across the globe by 2015 to give them an "experience-led store design." Colao said that the aim is to turn the stores towards being more like service centres, offering "fantastic service," as against simply a room full of cell phones stuck to shop walls. He added that customers should be able to purchase products online, and have the option to collect them in store.

Colao also said that as part of the strategy Vodafone will look to bolster its network capabilities and launch "healthy data pricing models" to ensure it differentiates itself from rivals. Other aspects of the 3-year plan include boosting customer loyalty and sustaining ARPUs, while at the same time improving average margin per user.

This mention of average margin per user (AMPU) would, according to Colao, becoming an increasingly important metric at a time when handset subsidies are putting operators' earnings under pressure. "We're moving to pull back on [acquisition and retention] costs," Colao told Total Telecom. "At the end of the day it is the margin that matters," he added.

This is not the first time Vodafone has touted "Supermobile" as a strategy. In fact, Colao expounded at length on the strategy in November 2010. "This is the whole set of things, and this is going to be a strong strategy based on covering technology, covering pricing, covering all the customer experiences and all the touch points that a customer will touch and, of course, covering all leading devices," he said at the time. "Our objective here is clearly to deliver data earlier and more profitably than what we thought under the old strategy."

Separately, Vodafone's 11 per cent drop in full-year profit due to higher taxes and weaker operations in Europe, left analysts largely unconcerned.

Will Draper from Espirito Santo told City AM that the outlook was slightly disappointing. However, in a sector context, the fact that Vodafone has reiterated a growing dividend should provide reassurance.

Jonathan Jackson of Killick & Co added that Vodafone's results were encouraging. "Although the reduced guidance on revenue for next full year is a little disappointing, we are comforted by the expectation for stability in free cash flow, given that is the driver of the 7 per cent dividend growth target."

For more:
- see this release
- see this Wall Street Journal article (sub. req.)
- see this Total Telecom article
- see this City AM article

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