How Vodafone Group plc Plans To Squash The Competiton

Vodafone (LSE: VOD) (NASDAQ: VOD.US) is planning to dominate the UK mobile market, stealing market share from its peers as part of the company’s much touted ‘Project Spring’ infrastructure development. 

Specifically, Vodafone is planning to out manoeuvre its peers by boosting its presence within the UK rural telecoms market. The issue of mobile coverage (or lack of it) in rural locations around the UK has recently been a topic of hot debate, and it would appear as if Vodafone is seeking to do something about it. 

Providing accessVodafone

Vodafone is looking to provide mobile access for the first time to 100 communities across the UK. Communities can apply for the installation of Vodafone’s technology, which will offer 3G mobile coverage. 

Historically, mobile operators have struggled to connect rural communities. Costs of connectivity can be high and there are usually planning issues with masts, especially in the more picturesque regions of the country. 

Vodafone has found a way to get around these hurdles by using femtocell technology. This technology means that only small base stations are required to provide 3G access. These base stations are small boxes, which can be installed almost anywhere. 

Vodafone will begin its roll out of femtocell technology at the end of this year. Communities have until October to apply for consideration. 

Hefty spending

Vodafone is planning to spend £1bn revamping its mobile network across the UK this year. As part of this spending, the company aims to extend 4G access to an additional 259 cities and towns, as well as thousands of smaller communities, virtually steamrolling the ambitions of its competitors.

Part of a bigger plan

Vodafone’s efforts to bring 4G to the masses is part of the company’s Project Spring, a hefty infrastructure project designed to make Vodafone one of Europe’s best mobile operators.

In particular, Project Spring will see Vodafone update its entire network across the continent, giving European customers unprecedented 4G access. Management hopes that this hefty capital outlay will boost the company’s revenue on the continent, as customers are drawn to Vodafone’s best-in-class mobile offering.

Current forecasts predict that Project Spring will generate an additional £1bn in free cash flow per annum for Vodafone, from 2019 onwards.

Other opportunities

However, only time will tell if the company's Project Spring will help boost earnings and allow the company to push ahead of its peers.

The project is a big multi-billion pound gamble, and things could get even worse for Vodafone if this spending does not pay off. Unfortunately, the company's dividend could be under threat.

Specifically, City analysts are expecting Vodafone to report earnings per share of only 6.5p for this year, although the company is set to payout an 11.4p per share dividend. 

Still, as of yet the Vodafone's management is committed to the payout but it always helps to be prepared, and well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby.

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Rupert Hargreaves has no position in any shares mentioned.