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Vodafone Australia seeks Verizon cash for IT upgrades

Vodafone Australia is seeking a share of the cash that Vodafone Group will receive for selling Verizon in order to make a number of IT system upgrades.
Written by Josh Taylor, Contributor

Vodafone Australia has asked for some of the funds that Vodafone Group received as part of exiting the joint-venture Verizon Wireless business with Verizon in the United States to upgrade its IT systems, as the company works to woo back some of its former mobile customers.

Earlier this month, Verizon announced that it had signed a long-speculated deal with Vodafone Group to acquire its stake in the joint-venture Verizon Wireless in a deal worth $130 billion, including $58.9 billion in cash. As part of that sale, which is due to be finalised in the first quarter of 2014, Vodafone Group committed to reinvesting around £6 billion back into its businesses worldwide as part of "Project Spring", which includes its Australian joint venture with Hutchison: Vodafone Hutchison Australia.

Vodafone Australia has been a difficult business for the global Vodafone corporation over the past few years, with more than 1.5 million customers leaving the mobile provider since 2010, bringing its customer base down from 7.5 million to 6 million on the back of network and customer service issues.

Since then, the company has invested over AU$1 billion in its network, and has undergone a massive restructure, cutting about 45 percent of its staff and replacing two thirds of its executive team. At the end of 2012, the company received a reported AU$2 billion funding injection from its parent companies to pay down some debt, and continue the investment in its 3G and now 4G networks.

CEO Bill Morrow said he is pleased with the amount of investment provided by the shareholders so far, but said that he had made a submission to Vodafone Group for an undisclosed portion of the £6 billion cash fund for an overhaul of its IT systems.

"We'd like some additional monies to actually go in and retrofit some IT systems, because I think there's a different level of sophistication we can apply to give our customers even better service and that's the submission we've made," Morrow told the ABC's Inside Business.

A spokesperson for Vodafone confirmed that most of Vodafone's IT systems are currently being overhauled, and the additional funds would help accelerate the replacement of their systems, including the Siebel customer management system.

The company has been seeking business analysts for Vodafone's IT modernisation.

When Vodafone and Three merged, there were a number of duplicate systems that the company has worked to reduce over time. The Three brand is now no longer in the market.

Morrow said that there were no discussions currently underway for Vodafone Group to buy out Hutchison's stake in the company, and he reiterated that Vodafone will be back in positive territory next year.

It comes as Vodafone is attempting to woo back customers to the telco with a range of new plans, and its new 4G network. The company had initially claimed to have the fastest 4G across the major capital cities in Australia, due to having larger spectrum holdings in the 1800MHz band that 4G is currently deployed in.

The claim led to a legal threat from Telstra, which now has 20MHz of contiguous spectrum in the 1800MHz band in Perth, Brisbane, and Adelaide, and 15MHz of contiguous spectrum in Sydney and Melbourne as a result of a restack.

The telco backed off, however, and Morrow said that Vodafone stands by its claim.

"Clearly, with our spectrum position that we have, given the unique, and the nice, rich nature of it, we can offer the fastest speeds with the current 4G LTE standard. And that is faster than what Telstra or Optus can do across all five cities," he said.

He said that Telstra challenged the claim not as a lawsuit, but as a dispute with a "legal overtone" that Vodafone was bringing the fastest speeds in Perth and Adelaide, but Vodafone ultimately won out.

"We disputed that, we explained why, they backed down from it, and it's a fact: Vodafone Australia does bring consumers the fastest 4G around the five capital cities of Australia."

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