A shift in power as Vodafone shares plummet?

Vodafone has lost almost £11 billion from its stock as it begins to feel the pinch of the economic slowdown. After the company announced a revision in its revenue forecast, shares fell by move than 13 percent.

While Telefónica SA, the parent company of O2 also lost around 7 percent of its own value, it may still be in a stronger long-term position. The most oblivious advantage is its proprietary deal with Apple, bringing the iPhone to the UK and Spain and 14 other countries as sole vendor. Evidence of strategic success came with great initial iPhone sales and its posting of a 22 percent increase in net profits for Q1 this year.

It might be said that Vodafone has spread itself too thinly with recent purchases in Ghana and a huge joint investment in Alltel ($21.8bn). Indeed, the Times reports that "Vodafone’s revenue growth in emerging markets and the Pacific region slackened from 12.6 per cent in the previous quarter to 9.2 per cent". However, investments in fast growing areas like India could still pay off and turn things around.

While it’s clear that the sudden slump has knocked confidence across the sector, it remains to be seen what long term implications these two very different companies and their very different business models will have for the telecommunications market as a whole.