Vodafone’s growth hit in the wake of riots in Egypt

Egyptian riots, and Vodafone’s conceivably subsequent mishandling of its operations at the time, had resulted in 80 percent drop in the telco’s growth rate in the country. The company suffered loss of millions in both customers and revenues.

During the January uprising, the Egyptian Vodafone network was suspended as it succumbed to the demands of former president Hosni Mubarak’s regime, and also sent four propaganda messages by text to its customers. The company has eventually, come under heavy criticism. The suspension of the Vodafone network entailed 24 hours cancellation of all voice services, in addition to shutting down data services for five days, all of which meant hindered contact with the outside world at a critical juncture.

In a bid to justify its actions, Vodafone asserted that the move was undertaken in view of the safety of its staff; adding that the Egyptian users understood the circumstances. Apparently, political commentators overseas did not agree. In addition, resentment against Vodafone appears not to have subsided as yet, in view of nasty Twitter remarks by users.

Figures released by Vodafone bear testimony to the telco’s slump in new business. Three months prior to December 31 – before the eruption of the riots – Vodafone witnessed an increase of 3.1 million users to hit a total of 31.3 million, in comparison to 2.4 million net additions in the quarter before that.

Yet, this figure in particular saw a drastic drop and touchdown to 561,000 during the three months when the riots occurred, representing a growth level of slightly more than a sixth of the earlier levels. And, in the quarter to June 30, Vodafone witnessed a recovery of sorts with 1.9 million net additions.

According to Vodafone, the general chaos in this part of the world at the time must have much to do with respect to the decline in its rising net subscriber additions. Apparently, Egypt is a key growth territory for Vodafone, and the slowdown in net additions is likely to put more pressure to examine the company’s contracts with governments in emerging markets.

Although, governments reserve the rights to control mobile networks during emergencies, commentators argue that the response provided by Vodafone did lack the punch.

Vodafone serving 40 percent of Egypt’s mobile users, together with rival operators France Telecom and Etisalat that have 40 percent and 20 percent market share respectively negotiated with Egypt’s then new coalition government, eventually to be forced to suspend services.