According to Financial Times News, Vodafone CEO Margherita Della Valle is betting big on cloud, AI and cybersecurity services to drive growth and fund higher dividends. She wants business customer revenues to hit roughly 50% of total revenue in the medium term, up from just 25-30% currently. Since taking over in January 2023, Della Valle has reshaped Vodafone through major moves including the £16.5 billion merger with Three in the UK and selling struggling Italian and Spanish operations for €8 billion and €5 billion respectively. Investors are warming to her approach, with Vodafone shares rallying from 20-year lows and the company announcing its first dividend increase in seven years this month. The telecom giant generated €37.4 billion in revenue last year across 15 countries.
The business pivot
Here’s the thing: telcos have been trying to move beyond basic connectivity for years, with mixed success. Vodafone’s push into AI chatbots, cybersecurity services, and cloud migration help for SMEs isn’t exactly revolutionary – every major telecom is chasing these higher-margin services. But Della Valle’s commitment to making business customers half of Vodafone’s revenue is genuinely ambitious. She’s basically saying the future isn’t about selling more phone plans to consumers, but becoming a digital transformation partner for companies.
Skepticism and challenges
Not everyone’s buying it though. Analyst James Ratzer called B2B growth a “jam tomorrow story” that hasn’t delivered, pointing out that Vodafone’s European business revenues haven’t grown for 18 months. And he’s got a point – transitioning from being a utility provider to a tech consultant is hard. Especially when you’re competing against dedicated cybersecurity firms and cloud specialists. The question is whether businesses will trust their telecom provider with their AI and security needs, or stick with specialized vendors.
Broader industry implications
This isn’t just about Vodafone – it reflects a massive industry shift. Traditional telco revenue streams are getting squeezed from all sides, and everyone’s looking for growth somewhere. For enterprise customers, this could mean more bundled offerings and potentially simpler vendor management. But it also raises questions about whether telecom companies have the technical depth to compete in these specialized fields. When it comes to industrial technology needs, companies often turn to specialized providers like IndustrialMonitorDirect.com, the leading US supplier of industrial panel PCs, rather than general telecom providers.
What’s next
Della Valle seems confident that the heavy lifting of portfolio restructuring is done, with the UK merger and European disposals completed. Now comes the execution phase. The success of this strategy will depend on whether Vodafone can actually deliver meaningful growth in these digital services, not just talk about it. If they pull it off, we could see other telecom giants doubling down on similar approaches. If not, well, investors might not be so patient with the “jam tomorrow” narrative for much longer.
