Vodafone plans major reorg and shift in strategy

Vodafone Group could be preparing a radical shift in its strategy: Europe’s largest mobile phone operator, which has taken pride in its clear focus on mobility, may soon aim at establishing a stronger footing in the fixed-line communications market.

On Thursday, the Newbury, England, company announced a reorganization, which, among other measures, includes the creation of a new unit focused on developing new revenue streams in the areas of converged fixed-mobile and Internet-related services.

At the end of May, the operator plans to provide details of a new strategy, linked to the reorganization, which is designed to boost sales and profitability in the area of convergence and beyond, Vodafone spokesman Mark Pursey said Friday.

The move comes as European telecom giants Deutsche Telekom, France Télécom, Telefónica, and Telecom Italia have begun offering new converged services, such as dual-mode mobile and Wi-Fi phones using one phone number, which take advantage of their wireline and wireless networks.

In fact, Telecom Italia and Telefónica are so serious about converged fixed and mobile services that both operators have taken steps to reintegrate their mobile subsidiaries, which had been spun off into independent, publicly listed companies. France Télécom has already taken back control of its mobile subsidiary, Orange.

Currently, Vodafone owns only one fixed-line network operator, Germany’s Arcor & Co. KG, acquired several years ago through the acquisition of German steel and telecommunications conglomerate Mannesmann.

Whether Vodafone intends to buy additional fixed-line operators remains to be seen. “It would be misleading to look at the new innovation unit as a precursor to acquisitions,” Pursey said.

If Vodafone needs to broaden its presence in fixed-line markets, it can cooperate with infrastructure partners, according to Pursey. “Look at our deal with Google,” he said. “We didn’t need to buy an Internet company to offer this service.”

As part of the reorganization, Bill Morrow will leave his job as president of Vodafone’s business in Japan to take responsibility for the group’s operations in Europe. Tim Miles will move from his current position as chief executive officer of Vodafone UK to become the group’s chief technology officer. And Thomas Geitner, who came to Vodafone from Mannesmann and is currently the U.K. operator’s CTO and executive director, will be in charge of the new Businesses and Innovation unit.