Mobile data goes global

Vodafone AirTouch's global data strategy, unveiled last week, is being met with mixed reactions. Touting it as the first global wireless data and Internet platform, Vodafone AirTouch admittedly introduced the offering as an effort to win Mannesmann.

Some worry that the announcement was rushed to meet the deadlines of the takeover offer and as a result may be little more than words on paper. Others believe the strategy, though said to be global, will have little effect on the U.S.

"Vodafone [AirTouch] has to pull [out] all the stops to make itself attractive to shareholders," said Maureen Coulter, senior analyst with The Yankee Group.

Vodafone AirTouch believes its new data services will prove that it can continue to grow revenues. Even without the Mannesmann combination, Vodafone AirTouch expects data services to increase the average revenue per user 20% to 25% by 2004, said Arun Sarin, CEO of Vodafone AirTouch's U.S. and Asia-Pacific regions.

Adding a data component could convince Mannesmann shareholders that Vodafone AirTouch is more valuable. "All of a sudden, it goes way beyond how many voice subscribers you have," said Elliott Hamilton, senior vice president for The Strategis Group. "Data changes the business plan completely."

Although Vodafone AirTouch has talked about introducing a major data plan for some time, many observers question how quickly this announcement appears to have been put together. "They're premature in that they won't have the first phase ready until summer," Coulter said.

An unnamed source said that Vodafone AirTouch in the U.S. had not heard about the involvement of some of the key partners. Other partners were jumping on board as the announcement was being made - Sarin was handed a note in the middle of a press conference saying that Psion agreed to join.

The global strategy has other interesting implications for Vodafone AirTouch's U.S. properties. The United Kingdom and Australia will be thefirst markets to receive commercial services in July. The rest of Vodafone AirTo uch's worldwide markets should be commercial by the end of the year, Sarin said.

"The U.S. group is going to have services in place before that," said Barney Dewey, consultant for The Andrew Seybold Group. That's because Vodafone AirTouch in the U.S. already has been developing its own data service plan separately.

Mannesmann pointed to an additional potential conflict in the U.S. in a released statement. "Even in the United States, Bell Atlantic, Vodafone [AirTouch]'s controlling partner, will continue with its own separate Internet strategy," the statement read.

Vodafone AirTouch is completing a wireless joint venture with Bell Atlantic, over which it won't have management control. That could mean that Bell Atlantic Mobile and Vodafone AirTouch in the U.S. may first have to integrate their own data services and then integrate again with Vodafone AirTouch's global plan. Vodafone AirTouch, however, said that Bell Atlantic has agreed to participate in its global data strategy.

Vodafone AirTouch in the U.S. also may struggle because of its historical subscriber base. "Bell Atlantic and [Vodafone] AirTouch have been mostly focused on the consumer market. They have very rudimentary capabilities to market toward the business market," said Rolf De Vegt, vice president at Renaissance Worldwide. He believes business users will drive the adoption of wireless data, and as a result, Vodafone AirTouch might be handicapped in the U.S.

Mannesmann found other shortcomings with the plan, including the lack of a brand until this summer, lack of an integrated wireless and wireline component and late entrance into the wireless data markets. Mannesmann was scheduled to release its defense against Vodafone AirTouch's takeover offer late last week but had not as of press time.

Despite Mannesmann's objections and questions regarding the data announcement, some believe Vodafone AirTouch will be successful in its takeover bid. "I have a feeling that Vodafone AirTouch does have a good chance, but it won't be straightforward," Coulter said. The data announcement will impress Mannesmann shareholders, she said. However, legal issues may get in the way, which could affect how the companies merge. Those issues could be large enough to affect the profitability of Mannesmann, she said.

Vodafone AirTouch believes Mannesmann has been overly focused on the risks of a merger. "It's all a diversion to cover up their inability to address the real issue of what Mannesmann can do better independently" than combined with Vodafone AirTouch, said Ken Hydon, chief financial officer for Vodafone AirTouch.