Deutsche Telekom eyes challenge to Vodafone’s alliance network

Deutsche Telekom (DT) put a shot across Vodafone’s bows by indicating that it is planning to license the Magenta brand outside of its operating footprint, to generate more revenue and build on existing procurement and roaming collaborations.

Hans‑Christian Schwingen, DT’s outgoing Chief Brand Officer, dropped fairly hefty hints about DT’s future plans for the Magenta brand in an article on the operator’s website.

He seemed encouraged by the response to 2019’s rebrand of DT’s T‑Mobile Austria business unit to Magenta Telekom, and said DT could use the more colourful marque not only for its own OpCos but also external partners (Deutsche Telekomwatch, #74 and #75). “I am convinced that our Austrian success can be an example for our other national companies, wherever they can also present convincing and substantial narratives”, Schwingen said. He added that “‘Magenta’, unlike ‘Deutsche Telekom’, is something we can license, and earn money with, even outside of our original footprint”.

Rival buying bloc emerging, too

Schwingen’s comments add to various signals that DT could be upping plans to emulate Partner Markets in other areas where it supports cross-operator collaboration.

DT already operates BuyIn, a procurement joint venture with Orange, and recently tied with Bell Canada and Portuguese operator NOS as part of long‑running attempts to build the alliance’s scale (Deutsche Telekomwatch, #91). Bell Canada competitor Rogers Communications is a member of the Partner Markets federation.

FreeMove, the DT‑backed roaming and enterprise services alliance, also recently added Swiss incumbent Swisscom to its membership, after the latter’s decision to leave Partner Markets (Vodafonewatch, #182).

Brand: a nice earner for Vodafone

Vodafone’s Partner Markets federation was originally set up in 2002, and while it has been decreasing in reach over the past decade or more, it still boasts around 29 partners in 42 countries. Recent additions include Vodafone Cook Islands (see separate report) and Vodafone Oman, a new entrant due to begin operations in the Sultanate later in 2020 (Vodafonewatch, #179).

Among these associates, ten use the Vodafone brand — although these tend to be either former Group businesses (and so may be in transition) or very small operators that desire the added clout of such a well‑known brand. They are: Airtel‑Vodafone in the Channel Islands; Vodafone Cook Islands; Vodafone Faroe Islands; Vodafone Fiji; Vodafone French Polynesia; Vodafone Iceland; Vodafone New Zealand; Vodafone Oman; Vodafone Qatar; and Vodafone Ukraine. With the Group in retrenchment mode, other markets could be added in future — such as Egypt, where the proposed sale of the Group’s stake in Vodafone Egypt to Saudi Telecom Company is described as the “basis for a long-term Partner Markets agreement” (Vodafonewatch, #182).

The Vodafone brand is also used by joint ventures such as Vodafone Hutchison Australia (VHA), Vodafone Idea (VfI) in India, and VodafoneZiggo (VfZ) in the Netherlands — and the Group generates a not‑insignificant revenue stream from these tie‑ups. Documentation seen by Vodafonewatch indicates that, in the year to 30 March 2019 (FY18–19), Vodafone charged VHA €16m (£13.4m), VfZ €30m, and VfI €16.2m for ‘brand-related services’ (despite VfI being set up in August 2018, part way through that financial year). Overall, Vodafone brand revenue amounted to €605.4m in FY18–19. This figure includes brand licensing to “OpCos, affiliates, and partner networks” of Vodafone, so includes significant internal re‑charging.

In Australia, where VHA is awaiting the green light to merge with rival TPG Telecom, the operator has indicated that, once merged, it will “operate a number of market‑leading brands and will continue to invest in developing each of its existing brands”, suggesting that the Vodafone brand will be around in the country for a while yet.