12/18/2005

Thinking the unthinkable…

Why Vodafone should ring off from Japan and America
The Telegraph: Sir John Bond, who becomes Vodafone’s chairman in July, should review its global strategy. The mobile operator is in investors’ bad books, with its shares trading at a steep discount to the sum of its parts.
But a change of strategy - if cleverly executed - could replace the discount with a premium. The solution is to sell Vodafone’s Japanese and US businesses. Not that it will be easy to exit them well. Take Vodafone Japan, which has been a particularly bad performer. It’s not obvious who would buy it. As a result, Vodafone may find it hard to secure the 7.7bn Pounds Sterling the business is worth on CSFB’s estimates.
That said, there is little strategic benefit in keeping Japan. Vodafone’s initial attempt to force Japan to use the same handsets as the rest of the group is one of the reasons it fell behind. What’s more, Japan’s poor performance has had a negative impact on Vodafone’s stock, disproportionate to its size.

Saaaaa.
Actually, Vodafone is cursed in Japan.
When British cellular giant Vodafone Group PLC (VOD) bought into Japan by acquiring J-PHONE, the Japan operation was neck and neck with KDDI in the market for the No. 2 spot. However, Vodafone Japan peaked just around the time officially changed its name “J-PHONE Co., Ltd.” to “Vodafone K.K.” (K.K. stands for “kabushiki kaisha”) October of 2003. It’s been a slide ever since.

At the start, he company was riding high on J-PHONE’s swift adoption to flat rate mobile data pricing of KDDI/au rather than the foot dragging attitude of DoCoMo.

Vodafone’s present woes come from it one-size-fits-all suite of handsets and services it has tried to unsuccessfully foist off on the Japanese rather than customizing their phones for Japan.

Vodafone has been claiming the its Japan operation has been on the mend for years now, when in fact its Japan business is suffering a steady decline without a hint of hope. It’s only a matter a of time before stockholders of the parent company Vodafone Group, demand a dump-and-run of Japan. As article in The Telegraph observes, if somehow Vodafone could get out of Japan (and the USA) the stock of Vodafone Group would be 30% higher. Yow.
To quote Monty Python and the Holy Grail, “RUN AWAY! RUN AWAY! RUN AWAY! RUN AWAY! RUN AWAY! RUN AWAY! RUN AWAY!!“