news Troubled mobile telco Vodafone has flagged its second staff restructure in less than a year, in a move that has seen a number of senior executives appointed and internal investment priorities changes, and which could see up to 500 staff lose their roles in the near future, representing about 10 percent of the company’s Australian workforce.
In a statement issued this morning, the telco said revealed a wide-ranging series of changes to its business model, ranging from changing its financial investment priorities to executive appointments. However, perhaps the most dramatic change to the company’s business will be what Vodafone termed its shift to “leaner, more effective operating model” which would see “a significant reduction” in the number of Vodafone’s “office roles” across the country. The company wouldn’t say how many staff are to be affected by the changes, and some roles are slated to be in-sourced or outsourced, but Delimiter understands the figure could end up being close to 500.
The news represents the second time over the past year that Vodafone has made a number of staff redundant. In January, the telco confirmed a report by News Ltd newspaper The Australian that it was planning to cut members of its mid-level executive team.
The company has been suffering financial difficulties for the past several years, stemming primarily from the late 2010/early 2011 series of network outages popularly known as ‘Vodafail’. Vodafone has been consistently investing in its network infrastructure and customer service capability since that time in an effort to redress the problems, but the company continues to lose customers – shedding 178,000 in the first six months of 2012. The company lost a virtually identical number of customers in the second half of 2011, and about 375,000 in the first half of 2011 (although some of those were losses on paper due to changed methods of accounting for customer numbers).
This morning, the company’s new chief executive Bill Morrow, who was appointed in March, detailed the staff redundancies in a statement, alongside a number of other changes stemming from a review of the business he had conducted.
As part of Vodafone’s shift to what Morrow described as an “agile, optimised organisation”, the company would also conduct a new “comprehensive” review of Vodafone’s customer support processes and optimise its “customer touch points”, as well as the “elimination of non-essential costs”, and a refocusing of investment priorities to focus on the strength of Vodafone’s 3G mobile network and IT systems.
Morrow said: “It is vital that we simplify the business to be efficient and to enable growth in the long term. We need to prioritise every dollar and internal action to count toward an improved customer experience and these changes are designed to deliver just this. We continue to face challenges, but I’m excited about the future. We’re committed to building an agile business that can finally give Australians the service they’ve been demanding from this industry for years.”
Further changes include the appointment of four new executives, being Brad Whitcomb (director Strategy, Transformation and Business Development), Cliff Woo (chief technology officer), Kim Clarke (director, Consumer Business Unit) and James Marsh (chief financial officer).
“I’ve been very fortunate in my career to work with some of the best and brightest talent in the world, none more so than here at Vodafone,” said Morrow. “We have called on the best home-grown and international talent to complement our existing leadership team and I am thrilled to be working with such a distinguished team of leaders.”
THe company is also progressing its plans to deliver a new 4G network next year (Telstra and Optus have already launched their 4G networks), and has successfully completed t he first test calls on its 4G infrastructure. It has also committed to delivering a substantial increase in network coverage and is “on track” to complete the remaining upgrades of its network infrastructure.
Morrow said the company’s existing restructuring and network investment efforts were starting to pay dividends, with network improvements meaning Vodafone customers could now receive increased download speeds up to 8Mbps on 60 percent of the carrier’s network, 3G data session and call set-up rates improved to meet international Vodafone benchmarks, dropped calls reduced by one third in metropolitan areas, and first call customer care resolution rates improved by almost one third in Vodafone’s call centres.
“Our customers are telling us they’re starting to see a difference, further demonstrated by a 50 per cent reduction in complaints to the Telecommunications Industry Ombudsman and, notably, a reduction in network-related complaints,” asid Morrow. “We are heading in the right direction, but more needs to be done.”
“The network is beginning to improve, the customer benefits are starting to flow and we’re intensifying our network investment as we position for future growth. Our focus is providing a consistently good experience wherever and whenever our customers touch our brand. We know we are not there yet. Only hard work, further investment and an acute focus will deliver what is needed in this market.
Morrow concluded: “It is vital that we simplify the business to be efficient and to enable growth in the long term. We need to prioritise every dollar and internal action to count toward an improved customer experience and these changes are designed to deliver just this. We continue to face challenges, but I’m excited about the future. We’re committed to building an agile business that can finally give Australians the service they’ve been demanding from this industry for years.”
“We’re not there yet, but we’ve come a long way over the past year – and now we’re building for the future.”
Vodafone is not the only mobile telco in Australia to be cutting jobs at the moment. The nation’s number two telco Optus announced in May that it would let some 750 staff go as part of a company-wide restructure. The fallout from that move is still being felt, with the company confirming cuts over the past several weeks within its Business division that some industry sources placed as high as 450. The company would not confirm at the time how many jobs were to go – only that the move was part of the restructure announced in May.
In July I wrote:
“After the Vodafail episode, Vodafone doubled down on its network and customer service investment. It was a risky bet, but probably worth it – you don’t simply walk away from a multi-billion dollar investment such as a national mobile phone network at the first sign of trouble. But as time goes on and the customer bleed shows no sign of abating at Vodafone, one does have to wonder what timeframe that investment was made on. At what point will its owners put Vodafone up for sale, or substantially restructure it so that it’s no longer a viable competitor to Telstra and Optus? If the customer bleed continues, will it be in a year? Two years? Three? Because I don’t think it will be in five.
The next six months to a year may prove to be the decisive time that will set up Vodafone Australia for the next decade. Because if it doesn’t show some positive signs with respect to its customer numbers in that period, the entire industry will be very publicly questioning whether it has a long-term future at all.”
Right now, what we’re seeing with Vodafone is the future of the company being decided. Over the next year or so, if Vodafone can stop most of the customer churn, bring its network back to acceptable levels and keep its costs low, then it may survive another few years at least to keep taking the mobile fight to Optus and Telstra. But if it cannot do these things, and there are solid reasons to suggest that it will not be able to, then Australia may be headed for a two-horse race in mobile telecommunications. For all our sakes – for the sake of mobile competition – I hope this isn’t the case. But right now things are not looking great.