Vodafone, the British multinational company headquartered in London is the world’s third largest mobile telecommunications company when measured in both subscribers and 2013 revenues with 434 million subscribers as of Q1 2014. They operate in 21 countries and have partner networks in over 40 countries. In September 2013, they agreed to sell their 45-percent stake in Verizon Wireless back to Verizon Communications for $130 billion – one of the biggest deals in corporate history, as they got out of the mobile wireless business in the U.S. to concentrate on their core European markets. Since that time they have been buying and merging with multiple companies as their empire continues to grow.
The departure from the U.S. seems to be more than Vodafone can bear as they jump back into the mobile service to cater to their over 400 multinational customers (MNC) in the U.S. as well as the more than 500 MNC outside the U.S., but have a “strong U.S. presence”. This time they are bypassing their old partner, Verizon, and jumping ship to become a MVNO of T-Mobile U.S. Vodafone expects the service to begin in “late autumn 2015” and will help complement their existing portfolio of mobile and Machine-to-Machine (M2M) products and services. Vodafone will also use this opportunity to roll out its industry-leading Vodafone OneNet global converged communications proposition across its U.S. MNC customer base.
Another reason that makes this partnership such strange bedfellows is that Vodafone and T-Mobile’s parent company, Deutsche Telekom, have long been international historic rivals, not to mention competing directly against T-Mobile with Vodafone’s stake in Verizon Wireless. However, good business can bring about companies as partners that would otherwise be at odds with one another. William Ho, a 556 Ventures analyst wrote in his blog:
“For Vodafone, the U.S.-based mobile offering provides the operator to enable service bundling opportunities, including low-cost mobile roaming across its 27-country footprint. The T-Mobile agreement should be more than an overall U.S. play as Vodafone Americas include Canada and Latin America. The company will push this as part of Vodafone’s OneNet solution which touts fixed-wireless solutions. The solution bundles include the usual enterprise operator offerings such as cloud services, M2M, telecom expense management, security and access to a global IP-VPN network.”
Even though both Verizon and AT&T currently have a larger LTE footprint, Vodafone may have gone with T-Mobile as they are supposed to have their LTE build-out by the end of 2015 when Vodafone expects to begin their services. Verizon and AT&T already have a large footprint in the business and corporate world – using T-Mobile to help Vodafone to expand in the business world might just be what the doctor ordered. T-Mobile already has the reputation of lower prices and real value for their services and armed with that reputation and the strength, Vodafone might be able to win businesses over to their side.