Vodafone CEO puts data and content first in comeback plans

Vodafone Australia could be known as the company that cried 'growth', but CEO Inaki Berroeta is confident that the company's long-awaited return is well under way.
Written by Josh Taylor, Contributor

The combination of a solid 4G network, data-focused plans, content bundling, and improved customer service will see Vodafone Australia's long-awaited return to growth in 2015, according to CEO Inaki Berroeta.

(Image: Supplied)

"I think [2014] has been about building a lot of things. We've been working on the network for this is the third year of investment. I think [in 2014] we leveraged a lot around 4G, the speed of our network, but also making the data more affordable for customers," Berroeta told ZDNet.

"Even though in Australia, the pricing was very much around voicing and we're moving away from that to more data-type plans for customers so they can enjoy the network more."

Since 2012, Vodafone has long talked about a return to growth, as customer numbers continued to decline. The end of the customer churn away from Vodafone to its rivals has not yet come to fruition, despite the yearly promises from Berroeta and his predecessor, now NBN Co CEO Bill Morrow.

In 2014, Vodafone's numbers continued to decline from the high of 7.5 million in 2010 to down under 5 million by June. That is a third of Telstra's reported mobile customer base of 16 million, and just over half of Optus' customer base of approximately 9 million.

The big test to see whether the bounce back is a reality will come in Vodafone Group's next set of financial results in February, which will contain the customer growth or churn figure in Australia.

Berroeta is quietly confident.

"I'm not going to talk about customer numbers until I need to talk about customer numbers. What I can share is we are really happy with how things are going," he said.

"The customer numbers are good, but also the profile of the customers we are getting has changed a lot."

Vodafone's launch of the Red plans that boosted data allowances and AU$5 per-day roaming options have significantly changed the type of customer signing up to Vodafone, Berroeta said.

The mixture of customers now tends to be those under 40 looking for data plans, along with business travellers and the self-employed, rather than those seeking traditional voice plans.

"A lot of customers that are coming to Vodafone are coming on the Red plans, so they are really people that are looking into heavy usage of phones. They see our Red plans as a good value. I think that is something that is very important from a customer numbers perspective," he said.

Berroeta came to Australia after leading the company's business in Romania and Malta from 2007. He is now the second former Vodafone leader poached from abroad to help turn around the Australian business, and took over at a time where the oft-described "turnaround" that CEO Morrow had yet to complete before he departed to take on the monumental challenge that is the National Broadband Network (NBN).

Where Morrow laid the foundation in launching 4G and the new Red plans, Berroeta has built upon it in the past year, striking content deals with Spotify and Fairfax, new prepaid plans, and the recycling of Vodafone's 850MHz spectrum for low-band 4G that will compete against Telstra and Optus' new 700MHz 4G spectrum.

There are now over 2 million devices on the Vodafone network using 4G, and Berroeta said he believes Vodafone is in the right position to grow.

"It was a lot of building blocks, but the challenge is to continue to build on this and deliver more value for customers, and be an easier company to do business with. Telecoms is still too complex for the customer, and I think there is a good opportunity to be better," he said.

The launch of the iPhone 6 and 6 Plus in October was more popular than the telcos were expecting, with a lack of stock provided, forcing out lengthy wait periods for customers wanting to get their hands on the new devices. Vodafone was no different.

"The launch of iPhone was super successful. It went very well. This was the best Apple product launch ever. I think it was well planned by Apple."

Despite the success of the latest iPhone, the company is looking to move away from relying on big phone launches as its method of picking up new customers. Although it has in the past splashed out on large advertising campaigns, particularly around the launch of the 4G network, Berroeta said that marketing isn't a big focus, with Vodafone looking towards customer recommendations to improve the Vodafone branding in the market.

"That is a lot of word of mouth. We don't spend a huge amount of money on advertising," he said.

Berroeta said that the company's Net Promoter Score reflects this with a "big jump" in the score, and customer complaints to the Telecommunication Industry Ombudsman (TIO) are coming down.

However, Vodafone's complaints to the TIO remain the highest in the industry, with the most recent report released in December revealing that Vodafone recorded 12.2 complaints per 10,000 customers between July and September 2014. This is over double that of Optus, and just under double that of Telstra for the same period. It is, however, a significant decline from a peak of 19.3 complaints per 10,000 Vodafone customers between January and March last year.

Telstra and Optus aren't likely to allow a resurgent Vodafone to take market share easily. Optus has sought to match Vodafone on many of the plans and offerings in the market, while Telstra has relied on its reputation for having the best and largest mobile network in Australia to keep its premium on mobile services.

Unlike its rivals Optus and Telstra, Vodafone doesn't have the luxury of supporting its mobile business with fixed-line broadband offerings. The company has dabbled in the past, and has even tested out NBN services with some customers in Brunswick in Melbourne, but Berroeta said this is not currently a big priority for Vodafone.

"The reality is there are many opportunities in this market to go into a fixed business. There are opportunities to expand on that side [but] today we are more interested in bringing content; we are more interested in enriching the mobile data experience," he said.

"We are infrastructure owners, so we always look at how to expand services, but for now we're very focused on improving the mobile experience."

Part of that will be a focus on content. Vodafone customers can now choose to receive a subscription to music-streaming service Spotify as part of their plans. The company is looking into video, but Berroeta said the decision there is tougher.

"We are looking into video as well. It's a little bit different. I think music was quite clear for us, because it was very clear who we wanted to be with," he said.

"With video, we're exploring different options, and also looking at how rich the offer is for the customer. There are really good companies there as well."

The CEO has been hard at work for the past year, and said he has seen little of Australia outside of offices and hotels. He has taken his family on some sightseeing trips, however, including to Hobart, where the company's newest call centre will soon be officially opened.

The two centres in Tasmania now employ over 1,000 people, including 400 employed in 2014. The newest centre boasts three floors, and Berroeta said there is a slippery slide as an option to get between floors.

The company is having difficulty recruiting additional call centre staff in the Apple Isle, and has now turned its attention to Melbourne and New Zealand in a bid to look for staff members willing to move to Tasmania.

"We have brought some people, but we're working in Melbourne and other places."

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