Voda KPIs : Lies, Damn Lies and Statistics
Sometimes a company releases a set of data so fundamentally flawed that it is completely pointless analysing it. I really feel for a couple of my City Cyberbuddies who have to analyse the Vodafone garbage released today, but warn readers that the blogosphere has been on the case for a while. The CFO, Andy Halford, even admitted the data is flawed and CEO, Arun Sarin admitted that he didn’t manage the business on the basis of the data.
The fundamental flaw is in the definition of the customer number, which provides the headline for all the newswire services. I shall use a couple of examples to illustrate the problem.
First of all, Vodafone include “inactive” customers ie those prepaid customers who have not had a chargeable event for less than 90days in its’ customer numbers. As you can see from the data the y-o-y growth in every market is over reported.
Secondly, you can see that including pre-paid customers in the 90-day limit similarly overstates the prepaid quite significantly. Andy Halford actually used the real life example of “spinning” for the reason that UK prepaid churn was so high. In other words people buy a prepaid handset, use up the credit on the SIM card and then put their old SIM card in it to keep the same number. In other words people have have more than one SIM card.
In last years Investor Day, ex-Vodafone Director, Peter Bamford, gave some data on the SIM card effect showing the effect on reported vs actual penetration in the UK, German and Spanish market. Today, Andy Halford used the example of Italy, where on Vodafone’s base there is an average of 1.3 sim’s per customer, thereby rendering the ARPU figures and churn figures completely useless – what is point?
The mobile operators should get together with the GSM Organisation or even the Accounting Standards and agree something more meaningful than the complete rubbish they report today.
Arun Sarin admitted he manages the company on the basis of revenue market share and profitability - this seems sensible to me. Perhaps the kpi's should be changed to reflect this (+ return on capital + cashflow)
On a more interesting note for the UK market, Arun promised new tariffs, new products and new distribution. I'm intrigued about the final element, I guess the first is the long awaiting reaction to the T-Mobile Flexr product in the post-paid segment and the second I'm assuming is the launch of the broadband product.
Arun also promised that Vodafone would have a broadband product in every European market by the end of the fiscal year (ie March 2007) He sidestepped the question on infrastructure acquisitions to support the broandband launch.
On a side point, I nearly dropped my morning cuppa, when an analyst asked Arun is he was considering Vittorio Colao as a replacement for Bill Morrow - Vittorio is the bookies favourite to replace Arun!!!
The fundamental flaw is in the definition of the customer number, which provides the headline for all the newswire services. I shall use a couple of examples to illustrate the problem.
First of all, Vodafone include “inactive” customers ie those prepaid customers who have not had a chargeable event for less than 90days in its’ customer numbers. As you can see from the data the y-o-y growth in every market is over reported.
Secondly, you can see that including pre-paid customers in the 90-day limit similarly overstates the prepaid quite significantly. Andy Halford actually used the real life example of “spinning” for the reason that UK prepaid churn was so high. In other words people buy a prepaid handset, use up the credit on the SIM card and then put their old SIM card in it to keep the same number. In other words people have have more than one SIM card.
In last years Investor Day, ex-Vodafone Director, Peter Bamford, gave some data on the SIM card effect showing the effect on reported vs actual penetration in the UK, German and Spanish market. Today, Andy Halford used the example of Italy, where on Vodafone’s base there is an average of 1.3 sim’s per customer, thereby rendering the ARPU figures and churn figures completely useless – what is point?
The mobile operators should get together with the GSM Organisation or even the Accounting Standards and agree something more meaningful than the complete rubbish they report today.
Arun Sarin admitted he manages the company on the basis of revenue market share and profitability - this seems sensible to me. Perhaps the kpi's should be changed to reflect this (+ return on capital + cashflow)
On a more interesting note for the UK market, Arun promised new tariffs, new products and new distribution. I'm intrigued about the final element, I guess the first is the long awaiting reaction to the T-Mobile Flexr product in the post-paid segment and the second I'm assuming is the launch of the broadband product.
Arun also promised that Vodafone would have a broadband product in every European market by the end of the fiscal year (ie March 2007) He sidestepped the question on infrastructure acquisitions to support the broandband launch.
On a side point, I nearly dropped my morning cuppa, when an analyst asked Arun is he was considering Vittorio Colao as a replacement for Bill Morrow - Vittorio is the bookies favourite to replace Arun!!!
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