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Thursday, 06 February 2014 20:31

Vodafone stops the slide Featured


Vodafone Australia lost just 22,000 customers last quarter, almost reversing a disastrous slide that saw it drop over a million customers in a year. But it is still losing ground.

Departing Vodafone Hutchinson Australia (VHA) CEO Bill Morrow has been given the ideal going away present. His company has pulled off a remarkable recovery in its fortunes, stabilising customer numbers before what it hopes will be a climb back to respectability.

VHA lost 22,000 customers in the three months October to December 2013. That’s a net figure – many low value customers exited and almost as many new ones joined, attracted by the company’s attractive 4G offering, lower rates and revamped advertising. Last week VHA said that there were now over a million devices on its 4G network – pretty good from a standing start less than a year ago.

The company now has just over five million mobile customers (5,008,000). It lost well over a million customers - 1,318,000, to be precise – in the year ended 30 September 2013. That was around a quarter of its user base – it simply could not go one shedding customers at that rate. Losing just 22,000 must seem a great relief.

 Morrow, the turnaround specialist who now has a much bigger job to do at NBN Co, can largely be credited with the result. He always said that 2014 would be the year it would happen – to get such a good result at the end of 2013 is a good sign.

The numbers were published in Vodafone Group’s quarterly report Thursday evening (Australian time), from which they need to be doubled to reflect that fact that VHA is a 50:50 joint venture with Hong Kong based Hutchinson. Australian financial numbers are not separately reported. All VHA would say was that service revenue was down 8.0% in the quarter, following a similar decline the previous two quarters. But it said that network performance and customer satisfaction have improved strongly in recent months.

On Wednesday night I happened to watch the beginning of the new series of Spicks and Specks on ABC TV, the show where little known wanky arts ‘celebrities’ try to guess the names of songs and laugh at each other. New host Josh Earl made a joke about Vodafone –“She asked me why I wasn’t talking to her. I said I’m with Vodafone – I get no reception.”

It just goes to show how much work the company still has to do to rid itself of the ‘Vodafail’ image resulting from disastrous network performance problems in 2011 and 2012. No doubt the joke writers thought it was funny.

No-one at VHA is laughing. Parent Vodafone corporation talks of ‘brand perception issues’ when explaining the performance of its Australian venture in its financial reports. Yeah, right. Reputations take a long time to earn, but can be trashed very quickly. And once trashed, they take even longer to recover.

But it just looks like VHA may be pulling out of its long and perilous decline. Karina Keisler, VHA’s general manager of corporate affairs, told iTWire: “Under Bill Morrow’s leadership Vodafone has embarked on a three-year turnaround which has transformed our business. As we enter the final stage of what has been an intensive period for the brand, we see these results as encouraging and demonstrative that our hard work and network investments are beginning to pay off.”

Keisler, a tough nut in a tough job who used to do PR for Telstra, said that in December, the last month of the last quarter, there was actually an increase in customer numbers. But, while happy with the numbers, she cautioned against over-optimism.

“Turnarounds can be patchy. It’s too early yet to say we have turned the corner. But the turnaround remains on track, with improved levels of network performance, net promoter scores and customer base management.”

The numbers will no doubt be a major tonic for Keisler and her public relations team, who have had to work doubly hard during these challenging times. They will, indeed, be welcome to all VHA staff. No-one more so than incoming CEO Iñaki Berroeta who, had he arrived much earlier, would have felt he had been handed something of a poisoned chalice.

Berroeta, who currently runs Vodafone Romania, starts on 1 March. He was here last week to check the place out. He is inheriting a company that still has a lot of work to do, but which just might be on the mend. As for Bill Morrow, he’s off to fix NBN Co. What fun!

iTWire wishes both the incoming and outgoing CEOs of Vodafone Hutchinson Australia the best of luck. They will both need it.

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire. He is one of Australia’s longest serving and most experienced IT journalists. He is author of the only definitive history of the Australian IT industry, ‘A Vision Splendid: The History of Australian Computing.’

He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time weekly IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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