The telecommunications industry is dependent on market share and branding in a sector where local tastes and market dynamics are difficult to predict. Three of the world's largest telecommunications companies, AT&T, Telefónica, and Vodafone, have similarly predicated growth on acquisitions and strategic market positioning, however, their success has been limited by cross-border geographical segment brand strategy. Whereas AT&T has focused on a singular brand within the US; Telefónica has not been afraid of cross-border acquisitions within the western hemisphere and Vodafone saved face by pulling its brand out of Japan. Recent acquisitions and divestures by these companies provide extensive brand strategy insight into a sector where brand-differentiation is most critical.

 

AT&T
AT&T Inc. is one of the world's largest telecommunications holding companies and is the largest in the United States yet it operates globally under one brand:  AT&T. Currently, the majority of AT&T revenues are from the US where this sole branding across several telecom segments appears to be effective.  But, large corporate customers are demanding consistent service with high levels of accuracy, cost-efficiency and automation wherever they do business which means that AT&T must expand globally to better serve its global enterprise customer base by finding strategic opportunities around the globe.

 

AT&T's plan is to extend services, reach, and access into additional locations in Europe, the Middle East, Africa, Asia, Latin America and in the United States, as part of their previously announced billion to .5 billion expected capital investment in 2006.

 

This process has begun with the merger of AT&T with SBC Communications that resulted in the newly branded AT&T. SBC officially acquired AT&T on November 18, 2005 for .9 billion, but decided to rebrand under the stronger and more recognizable AT&T moniker. This deal has been followed, in an effort to control more of the US market, with a proposed acquisition of BellSouth by AT&T. The proposed deal would have AT&T paying billion for BellSouth, which also owns the 40% stake in Cingular that AT&T does not own, giving AT&T coast-to-coast wireless coverage in the U.S. in addition to full ownership of Cingular. This deal will propel AT&T ahead of its main competitor in the U.S. market, Verizon Communications.

 

AT&T is looking to build on its U.S. market strength and expand further into other global markets to satisfy consumer wants for consistent service worldwide. They have earmarked around billion for capital investment over the next fiscal year, so deals to expand into other markets may be forthcoming. Time will tell whether or not the AT&T brand will transfer across borders.

 

Telefónica
Telefónica Group has a long-term strategy to become a leader in the integrated telecommunications group throughout the world. They also want to be the best among the telecommunications group, meaning that they want to be leaders in customer orientation, innovation, operating excellence, and professional services. This all leads to the ultimate goal of being the largest, referring to shareholder profitability, growth, and value creation. Telefónica will be selective in acquiring telecommunications operators who are relatively strong in their respective markets.

 

Telefónica, a Spanish telephone company, acquired Cesky Telecom, a Czech Republic mobile operator, for €2.746 billion. The economies of scale will allow Telefónica to effectively and quickly expand their operations in the Czech Republic, while continuing its ultimate goal of expanding across Europe and other continents.

 

Telefónica continued its growth within Europe when it recently acquired O2, a U.K. based mobile phone company, for .6 billion. This deal was one of the largest globally in 2005 and gives Telefónica a presence in the U.K., Ireland, and Germany. This deal allows Telefónica to continue its expansion outside of the Spanish market and into other European areas; however, it will retain the O2 brand.

 

Telefónica had previously acquired the Latin American assets of BellSouth in 2004 for .85 billion. By taking over these assets, Telefónica jumped to the head of mobile communications in Latin America ahead of America Movil. This deal gave Telefónica inroads into eleven Latin American countries, including Argentina, Chile, Peru, Colombia, and Venezuela. The deal was natural for Telefónica because of the linguistic and cultural connection between the Spanish based company and those countries in Latin America and the Telefonica brand was able to transfer culturally to these other Latin countries.

 

As shown by the previous acquisitions, Telefónica is taking a proactive approach to finding and acquiring advantageous opportunities to expand its telecommunications base. It has significantly increased operations throughout Europe and Latin America over the previous year and a half and seems poised to continue in an effort to expand globally.  Its branding strategy allows transfer of the Telefonica brand to other Latin countries while respecting and preserving locally strong brands like O2 - which is set to be rolled out into non Spanish speaking countries, starting with the Czech business, Cesky Telecom, and Telefónica's German wholesale business, Telefónica Deutschland.

 

Vodafone Group PLC
Vodafone Group PLC is in a different position than AT&T and Telefónica as it refocus its long-term strategy away from covering the entire globe. Vodafone had spent billions of dollars to expand globally in the past few years and is admitting defeat as it removes itself from key international regions. Vodafone is now being watched for future divestitures of forays into foreign markets, in particular the U.S. market, where its largest asset is Verizon Wireless in which it owns 45%. Vodafone contends that it is happy with its current position in the U.S. and has no plans to sell, however it remains to be seen how it will redirect its assets, whether trying again in another foreign market or focusing closer to home in Europe.

 

The deal causing the concern over Vodafone's future direction was the recent sale of Vodafone Japan to Softbank Corp of Tokyo for .6 billion, essentially ending Vodafone's attempted entry into the Asian marketplace. The foreign investment into Japan was difficult, as is the usual for foreign companies, and eventually ended in failure.

 

However, Vodafone has been busy in the past year with deals throughout Europe. In December of 2005 Vodafone acquired Telsim, a mobile operator in Turkey, for .55 billion. While earlier in the year they also acquired Mobifon, a Romanian mobile operator, and Oskar Mobil, a Czech Republic mobile operator, from a Canadian based company for .5 billion cash and assumption of {text_value}.9 billion in debt. These acquisitions in the European market were offset by the sale of Vodafone Sweden to Telenor on October 31, 2005 for €1.035 billion. These deals show the strategic maneuverings within the European market of Vodafone in an attempt to grow.

 

Vodafone is also trying to become a player in a growing telecommunications market, India, with the acquisition of ten percent of the Bharti Tele-Ventures for .5 billion. This indicates a change in strategy for Vodafone after they had pulled out of the Indian market in 2003. They are now focused on forming a strategic partnership with an established Indian brand instead of trying to create a market for them with the Vodafone brand.

 

Summary
AT&T, Telefónica and Vodafone all operate globally in the telecom sector; however, their branding strategies differ.  While AT&T, the American behemoth, focuses on a singular brand, Telefónica stretches its brand to culturally similar geographies but will retain the strong local brand, O2, and Vodafone, who has been burned on trying to transfer its brand to Japan, has re-focused its branding to specific markets and minority ownerships in other brands.