Vodofone Case Analysis

Position Analysis

Vodafone is a British-headquartered company that offers fixed-line, mobile, data, voice, and messaging telecommunication services to subscribers around the world. Vodafone’s first CEO, Gerry Whent, was responsible for Vodafone’s early growth by acquiring entire or controlling stakes in various phone chain stores throughout the UK. In 1997, Whent retired and the company brought in Sir Christopher Gent, who transformed Vodafone from a small U.K. based operation to a large global telecommunications giant through a number of significant international acquisitions. By early 2011, Vodafone was one of the largest wireless telecommunication companies in the world. Vodafone entered the Egyptian market in 1998 by acquiring AirTouch Communications for $75 billion, and quickly became the primary mobile phone provider in the country. By the end of 2010, Vodafone was the leading telecommunications company in Egypt, with 24.6 million Egyptian customers and employing 6,500 employees. Although they did operate off their own network, Vodafone was also heavily reliant on the Egyptian government for running certain critical elements of the network’s infrastructure.

In late January 2011, protestors in Egypt were gathering to protest the state of the country that Egyptian President Hosni Mubarak had ushered in over his 30-year tenure. This unrest was exacerbated by the 30-year state of emergency declaration that Mubarak had facilitated over the years. Social media was acting as the primary catalyst for protestors to organize, and President Mubarak’s government wanted to act swiftly and harshly to thwart protests aimed at the government. On Thursday, January 27, 2011, the Government ordered the three primary telecommunication providers (Vodafone, Mobinil, and Etisalat) to suspend telecommunication services to their customers in select areas. The government also wanted these providers to broadcast pro-government propaganda via text message to all of the company subscribers in order to take the side of the Egyptian Army, which the government had deemed the sole true protectors of Egypt. The penalties for non-compliance would be imprisonment of the company management as well as a suspension of their license to operate in Egypt.

Vodafone now had a choice to make: would they comply with the government requests, or would they choose non-compliance in order to minimize customer backlash? Which decision was more in line with their ethical, legal, and corporate obligations?

With all factors being considered, Vodafone had five options:

1. Follow the orders given by the Egyptian Government and follow their directions – Legally, this was the obligation Vodafone should follow in order to remain in compliance and within the favorability of the Government. It was more favorable to the corporate interests of the company to follow legal compliance, but this route would also undoubtedly bring heavy criticism from their customers and could affect bottom line profits if not communicated effectively to customers.

2. Flat out reject the requests of the Egyptian Government – This option would satisfy the ethical obligation of the company, as they would ideally prefer to promote and assist their subscribers’ freedom of speech and self-expressionism, allowing customers to talk and communicate freely without Governmental interference. However, this option would put them in direct violation of their legal obligations for operating within Egypt and bring harsh penalties.

3. Shut down their internet, but not get involved in the Government’s orders of delivering propaganda texts to Vodafone customers – This option allows the company to stay within their legal obligations of shutting down the internet in the areas requested by the Government while also allowing the company to preserve their business interests. This would mean the company does not have to jeopardize their ethical obligations by being caught up the propaganda efforts of the Government.

4. Set Proxy limits in order to limit certain anti-government content – Vodafone could choose to set proxy limits on customer phone usage by implementing security measures that would restrict users so that they could not post content that was viewed as negative to the Egyptian government. They could also implement controls that would not allow users to view anti-government information, such as protest locations and times, and any videos or messages that were shared in an effort to organize anti-government resistance. This would give the impression to subscribers that they still had access to social media and internet content.

5. Suspend the use of certain data, but not cellular data – This would restrict users from accessing internet content in the requested areas of restriction that the government was requesting, but would still allow users to make and receive phone calls and text messages.

This decision is one that would have far-reaching implications for Vodafone and their customers all around the world. Will Vodafone choose to comply with government requests? Or will they choose to be the voice of their customers