Vodafone (VOD) is warming up for the upcoming launch of Apple’s (AAPL) iPhone in the UK. The international telecom heavyweight will officially unveil the iconic smartphone on Jan 14, 2010. Vodafone currently sells iPhone in 11 countries including Australia, the Czech Republic, Greece, Italy, India, Portugal and South Africa. However, the carrier has not yet tapped the key European markets.
Vodafone UK, along with its peer France Telecom’s (FTE) Orange UK, sealed marketing rights to iPhones in Sep 2009. This effectively ended Telefonica (TEF) O2 UK’s two-year exclusivity on the device in the UK. Orange UK launched iPhone on Nov 10, 2009. As such, Vodafone UK will be the third carrier to market the device. However, O2 UK, which has been marketing iPhone since Nov 2007, will continue selling the handset in the UK.
Vodafone UK has already initiated the pre-order proceedings and will sell iPhone through direct distribution channels and dealer networks. The company is offering free Vodafone-to-Vodafone call facility for those pre-ordering the device (till Jan 13, 2010).
Moreover, Vodafone UK has divulged pricing and tariff details for iPhone 3G and iPhone 3GS which mostly remain in line with O2 and Orange UK. The lowest tariff has been set at £30 per month for a 24-month contract with iPhone 3G (8GB), iPhone 3GS (16GB) and iPhone 3GS (32GB) are priced at £59, £149 and £239, respectively.
iPhone 3GS (16 GB) is available free at £45 per month (on an 18-month contract) and at £50 per month (on a 24-month contract). Moreover, iPhone 3GS (32 GB) will be free on a 24-month contract at £80 per month. All deals come with unlimited text and 1 GB of data access.
The UK wireless market, Vodafone’s home turf, remains one of the toughest markets in Europe with five major operators in the rat race for market share and customer retention. With nearly 25% market share, Vodafone UK currently ranks second behind O2 UK.
However, the competitive scenario in the British mobile market is expected to change radically in the near future as Deutsche Telekom’s (DT) UK subsidiary T-mobile UK (fourth-largest carrier) is set to merge with the third-ranked Orange UK.
The merger, if successfully consummated, will create an 800-pound gorilla with approximately 37% share. As such, Vodafone may face significant challenges in retaining market share given the potential for more aggressive price competition. Vodafone UK is currently losing customers as they switch to O2 UK.
iPhone places Vodafone UK on a level playing field with its two major rivals O2 UK and Orange UK . Moreover, the device represents a major opportunity for the carrier to bolster its presence in the UK mobile market by enticing new high-end subscribers. Vodafone UK will leverage the nation’s fastest 3G network (peak downlink speeds of 14.4 megabits per second) to roll out the popular handset, addressing a significant portion of UK’s cellular user base.
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