Can Morrow turn Vodafail into Vodafixed?

analysis Vodafone was very careful to paint its former CEO Nigel Dews' departure as an overseas promotion, but it really looks like he was put out to pasture.

Bill Morrow
(Credit: Clearwire)

It had been a tough 12 months for Vodafone Hutchison Australia (VHA); the company lost $350 million and 554,000 customers after suffering massive network issues that left customers with poor voice and data quality. The company's approach to customer service at the time was a flat-out denial of the problems until early 2011. After such a massive customer loss, it was clear that part-owner Vodafone group wasn't happy with the direction that the Australian company was heading in, so it was time for Dews to go.

Reportedly, Vodafone's global CEO Vittorio Colao approached long-time colleague and telecommunications industry veteran Bill Morrow, 52, to take on the job of steering VHA back from the brink.

Morrow has worked for Vodafone in one way or another for over a decade, and has had experience with reviving failing Vodafone brands. Morrow is credited with turning around Japan Telecom, which became Vodafone KK, before eventually selling the company in 2006 to Softbank for US$15 billion.

After his shock resignation in 2006 for family reasons, Morrow returned to the US and left the telecoms industry to become CEO of Pacific Gas & Electricity, until he resigned in 2009 and became CEO of US wireless provider Clearwire. In his brief, two-year stint at Clearwire, Morrow oversaw the roll-out of the company's national "4G" WiMax network.

Although the company lost US$94 million in the early phase of the roll-out, Clearwire saw a growth in subscribers. Given VHA's $800 million investment in a network upgrade, and the company's cut price rate for mobile phones and plans, it may be looking to replicate this sort of growth in the initial stages of recovery.

Vodafone Hutchison Australia is the only mobile network operator in Australia that has yet to reveal its plans for a long-term evolution (LTE) "4G" network in Australia. In his last results call, then-CEO Dews told journalists that the company was instead focusing on improving 3G with "4G" like speeds using HSPA+. However, the massive network upgrade using singleRAN Huawei equipment not only revamps Vodafone's 2G and 3G equipment, but also allows Vodafone to switch on LTE nationwide when the company is ready.

In an interview about "4G" technologies with ZDNet Australia's sister site CNET in 2010, Morrow said that Clearwire was interested in LTE, but, at the time, was sticking with WiMax until around 2012.

Since then Clearwire has started working on an LTE-Advance-ready network in the US. LTE-Advance is said to meet the full requirements for being classed as 4G.

Morrow boasted during the interview that Clearwire's advantage over its competitors was the massive amount of spectrum in the 2.5GHz band that Clearwire had available to it.

Vodafone will be looking to reinvest in spectrum this year: the company will plug freed-up spectrum from the 2100MHz 3 Mobile network back into the Vodafone network, and will re-license its existing 1800MHz spectrum. The company is also eyeing participation in the upcoming government auctions of the 700MHz and 2.5GHz spectrum bands at the end of this year, which will be used for the deployment of LTE networks. Yet, Dews said earlier this year that Vodafone will be focused on getting the right price for spectrum, and would not rule out missing out if the price is too high. Morrow reportedly met with Communications Minister Stephen Conroy yesterday with spectrum pricing as a high priority.

After two years at Clearwire, Morrow again resigned unexpectedly in March 2011 for "personal reasons", but told The Australian Financial Review that he left because the company had not put the investment into growth that he had expected.

Whatever his plans to save the Vodafone brand are, growth will clearly be front and centre of Vodafone's strategy, and Morrow has his work cut out for him. Telstra has launched a massive attack on Vodafone's customer base, with reduced-price mobile plans that have secured close to 2 million new mobile customers in the last 12 months, bringing Telstra's customer base up to 13 million.

Yet, Vodafone may be presented with an opportunity as increasing reports of network congestion surface from Telstra customers, particularly in the Sydney and Melbourne CBDs. Vodafone's cut price plans and brand new network may give the company the boost to win back disgruntled Telstra customers who have found Next G to be providing a worse service than they expected.

VHA is already out hard marketing the customer-focused rebranding of Vodafone on TV and radio. The advertising features actor Samuel Johnson pitching Vodafone's network guarantee that if customers pick up a new mobile plan and find the network coverage to be lacking, they can get out of the contract by only paying for what they have used.

ZDNet Australia approached VHA for an interview with the new CEO, but Vodafone declined.