Vodafone expects SME hit but looks to automation, 5G, and IoT to respond to COVID-19 crisis

Following the announcement of Vodafone’s FY2019/20 financial results and COVID-19 guidance; 

Gary Barton, Principal Analyst atGlobalData, a leading data and analytics company, offers his view:

“Vodafone’s increase in momentum is, in most European markets, a slowing in decline of service revenues rather than increased organic revenue growth. The upside is that the provider can point to overall growth in enterprise revenues, including growth in key areas such as software-defined wide area networks (SD-WAN), cloud and internet of things (IoT).

“COVID-19 provides a clear challenge to Vodaphone’s momentum, particularly given the provider’s strong presence in markets that have been among the most severely affected by the crisis such as Italy, Spain and the UK. The provider is already receiving requests from small medium enterprise (SME) customers for payment deferments while its multinational corporation (MNC) customers are delaying projects.

“Vodafone has rightly focused on the responsibility of service providers to support both society and its enterprise customers, and has backed this by already committing more than €100m to support various COVID-19 related initiatives. Vodafone is using its UC/collaboration and mobility portfolio to help enterprises adapt to mass homeworking.

“The provider also believes that its portfolio is well placed to help its enterprise customers recover from the crisis. For example, Vodafone has already adopted a ‘disruptor’ approach to selling SD-WAN with aggressive pricing and a focus on delivering overlay services. Vodafone believes that the opportunity will increase as enterprise will be more inclined to move away from more expensive and less flexible MPLS service towards more internet-based SD-WAN. Similarly, it is targeting growth in 5G and IoT, supported by investment in edge compute, sales as it seeks to support enterprise in automating processes and enabling remote working and process management.

“Vodafone’s assumptions seem likely to be correct. It can point to its own internal automation work in areas such as customer contact and service provisioning as an example to customers. Its investments in analytics capabilities and its work to deliver more flexible pricing models with minimal levels of commitment from enterprise customers will also be a benefit, as will promised investment in its managed security portfolio. Realizing its ambition to grow its share of the enterprise value chain will not, however, be easy.”

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