[3g-g]

What?! Surely not? I know this is Germany, however it's the 2nd biggest market for Voda outside of the UK, and what happens here must have an affect on VF UK. So, just how can you compete with T-Mobile when they're slashing call costs and pulling the punters through the door in the near millions?! T-Mob are doing it here, and we're seeing the evidence it's being successful, can they sustain the "stack it high sell it cheap" attitude?


VODAFONE, the struggling mobile phone operator, was dealt a fresh blow yesterday as Deutsche Telekom, the main rival in its core German market, announced plans to halve the price of mobile calls.

The aggressive move by Deutsche Telekom came after the German company was forced to issue a profits and sales warning yesterday, triggered by a wide-scale desertion of customers seeking cheaper deals.

Analysts said that the promised price cut — Deutsche Telekom is expected to slash the cost of mobile calls in its home market by up to 50 per cent — would hit Vodafone hard. Germany is Vodafone’s second-biggest market by revenues, accounting for more than a fifth of the UK mobile group’s turnover.

Vodafone, which is already battling against pricing and regulatory pressures in other key European markets, is likely to be dragged into a fierce price war in Germany against Deutsche Telekom’s T-Mobile.

Analysts at JPMorgan said in a note to clients: “Vodafone will need to react to the specific threat in Germany.” Dan Bieler, telecoms specialist at Ovum, said: “This is a significant (price cut). It is not good news for Vodafone.”

City concerns about Vodafone’s German operations helped to push down shares in the British mobile group by nearly 4 per cent yesterday. The profits warning yesterday by Deutsche Telekom, the latest in a string of alerts from Europe’s former state-owned telecoms companies, came after the group reported that bottom-line net profits had fallen by 14 per cent to €1.01 billion (£682 million) in the three months to June, despite a 3 per cent rise in revenues.

Kai-Uwe Ricke, chief executive of Deutsche Telekom, vowed to fight back with cuts starting in the autumn. “Bundled offers will cost well under 10 cents per minute, regardless of which network is being called,” he said. At present the cheapest off-network mobile calls in Germany are 14 cents a minute.

JPMorgan said that the Deutsche Telekom move highlighted a threat to European mobile players, with downside risks “especially severe for operators such as Vodafone that enjoy high market shares and premium price points”.

Analysts said that Vodafone was already feeling the heat in Germany, after its strategy of charging a premium price for a premium brand backfired.

In contrast, analysts said, rivals O2 and E-Plus, the mobile group owned by KPN, had offered cheaper prices that had helped to attract market share.

Vodafone has already started to fight back in Germany, launching products such Zuhause, aimed at stealing market share from fixed-line operators.

But its plans suffered a setback recently when Bill Morrow, who had been appointed head of European operations, announced his sudden departure.

[Hands0n]

T-Mob are doing it here, and we're seeing the evidence it's being successful, can they sustain the "stack it high sell it cheap" attitude?


T-Mobile are doing it not without some difficulty in the financial markets, they've recently posted reduced profits expectations in the face of their price cutting in Germany in particular.

However, the competition for custom in saturated markets has to be addressed or even the big guns like Vodafone will suffer. The buying public is utterly fickle, and increasingly savvy about costs as our disposable is ever-reduced by other compulsory expenses. At the end of the day, if it is a choice between food, rent , heating and the mobile phone I believe that the latter will be jettisoned first! Cheaper deals appeal strongly and T-Mobile have done some excellent work in 2006, scaring the pants off the competition.

Can Vodafone compete on an equal footing to T-Mobile in Germany? Probably, but at the cost of Arun Sarin's job I reckon. It is not his fault, but he'll no doubt be the scapegoat.

[solo12002]

All the more reason to have clear easy to understand fair priced price plans. not crap like STC or passport.

It is dam hard to understand that vodafone intend to chage 45ppm for x net calls in this day and age when t-mobile charge 12ppm for all calls on their PAYG Offering.

How much does STC and Passport cost vodafone over all? and would it be less if they stoped these and just reduced there core prices thus enabling others to use more their mobiles more often thus increasing income?