The rise of Vodafone from obscure mobile phone group to one of the world's largest telecommmunications companies is an odyssey of epic proportions. |
Along the way, it has recorded some historic firsts. There was, for example, the world's largest cross-border deal achieved through the $62bn acquisition of AirTouch of the US at the beginning of 1999. More recently, the company put down the largest amount - £5.96bn - ever paid for a third generation mobile phone licence.
The achievement, however, for which the company is guaranteed its golden page in business history is the £106bn acquisition of Mannesmann of Germany in February this year, the first successful hostile takeover on German soil and a pivotal point for German capitalism. As observers were quick to point out, the battle was fought and victory won without intervention from governments or much in the way of public outcry. After Vodafone/Mannesman, hostile takeovers would be normal practice in Germany.
It was, nevertheless, a spectacular battle fought out over several months in the offices of institutional investors in the US and Europe and through the press. The pressure was intense. Scott Mead, leader of the Goldman Sachs investment banking team which helped Vodafone to victory, remembers spending much of Christmas 1999 talking tactics with Chris Gent, Vodafone chief executive, over the phone while juggling his newly born infant on the other arm.
It is a story which says much about the focus and dedication of the Vodafone team. Mr Mead says: "It would be hard to think of something more satisfying than the Mannesmann deal. We were coming, I think everybody would agree, from behind but we worked hard and the bonding at every level was fantastic."
Vodafone today is the world's largest mobile phone company with operations across the globe. It is one of the largest telecommunications companies by market capitalisation and an acknowledged leader in mobile phone technology. In the year to March 2000, it generated revenues of £17.4bn and earnimngs before interest, tax, depreciation and amortisation of £5.3bn
Yet, it has not always been so, and its present position is a tribute to the foresight, entrepreneurial instinct and, it has to be said, luck of the founders.
The company was formed in the early 1980s as a subsidiary of Racal, the electronics group led by Sir Ernest Harrison. The founding chief executive was Gerald, now Sir Gerald, Whent.
The two men shared a vision that mobile telephony using cellular radio technology, then little more than an expensive convenience for business users and a fashion item for "yuppies", had a significant future.
But even they had little idea of how important it was to become. Their early estimates of potential customer numbers were, with hindsight, ludicrously low.
But they believed in the vision and in their ability to deliver it. Vodafone's only UK competitor at the time, Cellnet, owned 50 per cent each by British Telecommunications and Securicor, on the other hand, fumbled the issue badly. From the start, Vodafone has been the UK market leader, winning plaudits from contemporaries for sharp, spare management and tremendous execution. The modest nature of senior management's offices in the company's Newbury, Berkshire, stronghold is an example of careful housekeeping.
At one point, before BT bought out Securicor and shook up the management at Cellnet, Vodafone's profitability was roughly twice that of its UK competitor.
While dominating its home market, Vodafone was also looking for opportunities to buy mobile licences abroad. It now has more than 50m customers worldwide in 25 countries across all five continents. In the US, a deal with Bell Atlantic earlier left it with a 45 per cent stake in Verizon Wireless, the largest US mobile operator.
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