Strategic Alliances

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Eight case-lets on Strategic Alliances

Case 1: Telefónica and China Unicom
In September 2009, Telefónica and China Unicom announced a partnership including cooperation in R&D, roaming, joint procurement of equipment, infrastructural development, joint development of mobile services and the provision of services to multinational clients. They also announced the purchase of US$1 billion worth of stock in each other making the Spanish operator the largest single investor in the company with 8% of shares. China Unicom would in turn acquire a 0.9% stake in Telefónica, the former Spanish telecoms monopoly, which owns the European mobile operator O2 and is the largest mobile operator in Latin America. The alliance between Telefónica and China Unicom dates back to 2005 when Telefónica invested in China Netcom, that was acquired by China Unicom after the restructuring of the Chinese telecom industry. As a result of this recent development, China Unicom subsequently repurchased a 3.8% stake held by SK Telecom. A separate alliance between China Unicom and SK Telecom was formed in 2006 to exploit potential synergies for their respective CDMA networks. The divestment was fuelled by the fact that the alliance’s rational ceased to exist as China Unicom sold its CDMA network to China Telecom.

Case 2: Vodafone-led alliances
Vodafone is an organization that has traditionally used strategic alliances to fuel its growth. Leveraging its brand and advanced P&S suite, it allows partner operators to benefit from its R&D efforts and brand recognition while in turn expanding its geographical footprint and seamless service to its own customers with minimal capital investment. The Vodafone alliance with Telekom Malaysia, signed in 2006, is a good example of a successful Vodafone-led partnership. Vodafone signed a Partner Network Agreement with Telekom Malaysia covering the three TM subsidiaries; Celcom (Malaysia), XL (Indonesia) and Dialog (Sri Lanka). The deal allowed the three operators to gain access to Vodafone’s international voice and data roaming services, together with Vodafone’s suite of business solutions. In return, Vodafone extended its brand and services into high-growth mobile markets, pursuing a low-risk, non-equity strategy and provided its customers with access to preferential roaming rates. Another example of a successful non-equity strategic agreement is the du and Vodafone alliance formed in 2009. The essence of the partnership is to better meet the needs of their respective customers in the UAE. The first phase of the agreement allowed du, a new entrant in the UAE market, to gain access to Vodafone’s extensive suite of products, services and devices for the UAE market. Both Vodafone and du customers gained preferential roaming rates on the partners’ networks. du is also able to leverage Vodafone Group’s procurement to achieve cost reductions. During the second phase of the agreement announced in late October 2009, additional joint initiatives were explored including mobile broadband connectivity products, secure remote mobile access for small business users, converged email solutions, faster and exclusive access to new models of handsets.

Case 3: Bridge Mobile Alliance
Bridge Mobile Alliance is a business alliance of eleven major mobile companies in Asia and Australia. Members include Singtel (Singapore), Airtel (India), AIS (Thailand), CSL (Hong Kong), CTM (Macau), Globe (Philippines), Maxis (Malaysia), Optus (Australia), SK Telecom (S. Korea), Taiwan Mobile (Taiwan) and Telkomsel (Indonesia). The alliance is built on seamless service connectivity and a suite of integrated value-added services for all alliance members’ subscribers, roaming across each other’s networks. The alliance acts as a commercial vehicle in which all the operators jointly invest to build and establish a regional mobile infrastructure on a common service platform enabling seamless experience for customers while roaming. The alliance also serves...
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