Jeremy Warner's Outlook: Vodafone's licence to print money

Click to follow
The Independent Online

Imagine a world without mobile telephony. With 3.5 billion mobile phones now in existence worldwide, it seems barely conceivable. Yet just 25 years ago today, the date on which Vodafone was awarded one of two licences to operate a national mobile network in Britain by the then Secretary of State for Trade and Industry, Kenneth Baker, there were hardly any in existence at all.

British Telecom, which automatically got the other licence, was quoted at the time as saying that the market was really quite limited, with no more than 20,000 mobile customers likely by 1990, the great bulk of whom would, of course, belong to BT.

Ernie Harrison's brainchild wasn't called Vodafone in those days. Instead, it was a consortium of Racal, Millicom and Hambros. The Vodafone name, invented by Saatchi & Saatchi, came later. Yet even Sir Ernest didn't envisage a market of any more than a couple of hundred thousand, and these, he thought, were likely to be almost exclusively business users.

Even among those who knew about the propensity of disruptive technologies rapidly to achieve cost accessibility, the mass market potential of mobiles was scarcely even dreamed of. Vodafone was very much the underdog in the bidding process, but Mr Baker was persuaded to take a chance on the swashbuckling entrepreneurialism of the Racal consortium. It proved a licence to print money, the more so as the company that was meant to know all about telecommunications, BT, proved such an ineffective competitor.

For this extraordinary opportunity, Vodafone paid the princely sum of £1,000. Poor dear, it still has to pay an annual £1,000 renewal fee for its licence. It wasn't until much later that the Treasury realised what a potentially lucrative opportunity for taxing the general population mobile telephony really was. Vodafone and others were forced to pay billions of pounds each for their later 3G licences.

Meanwhile, Vodafone has grown and grown, and is today one of the biggest companies in the world, with extensive interests across Europe, the United States and now India, Turkey, Egypt and other fast-growing emerging markets. Europe, meanwhile, seems to have become as mature as mature can be, with penetration rates in some countries of close to 100 per cent (yes, some people have two or more).

Yet this is by no means the end. With new applications now arriving daily, it may indeed be only just the beginning. Here's to the next 25 years. However you imagine the future, Vodafone is likely to be a big part of it.

Comments