WHEN Vodafone group boss Vittorio Colao approached Bill Morrow early last year to return to the giant mobile operator's family after a six-year absence, it was for a senior job in Europe, not in Australia.
Morrow, who in 2011 had resigned from wireless broadband provider Clearwire, was excited to be re-joining the Vodafone family in Europe where he had once led the British operations, but a chance encounter with an HR executive changed everything.
"I went to the head HR guy to sign my contract but this guy was just so stressed about the situation in Australia. He was saying that we had big problems there but the company didn't know what to do about it. It was then I thought, well I've done Japan before and I like a challenge so why not Australia," Morrow says.
"Thankfully Vittorio thought it was a good idea too."
Morrow, a 10-year Vodafone veteran, came into the job as no stranger to turnarounds. In the mid-2000s he revived the fortunes of the group's Japanese operations before overseeing its sale in 2006 for Y=1.75 trillion.
. . . It was a huge success for both Vodafone and Morrow, so when he first landed on Sydney shores last year he thought the turnaround in the much smaller Australian market would be a simpler job. But when the silver-haired San Franciscan arrived the situation was worse than expected. In the two years before his arrival in March last year, Vodafone had bled 1.3 million customers and more than $700 million as network meltdowns and customer privacy breaches demolished the company's once good name.
More than $1.7 billion was spent in that time to repair Vodafone's 3G network and restore the telco's reputation but the financial and customer numbers have continued going backwards.
In the past 18 months those losses have continued. More than half a million customers and $218m have haemorrhaged from the business in the past six months alone, leaving the company with a subscriber base of just six million compared to Telstra's 15.1 million and Optus's 9.5 million customers.
"There was a mindset that we would get in there and fix this thing within a year or a year and a half," Morrow says. "But as we dug in to find out the root causes behind why this company has declined we discovered that the turnaround was definitely not a 12-month to 18-month turnaround. There's another year and a half of elbows down and bums up to get this company where it needs to be."
At face value, the continued losses paint a worrying picture for the fate of the nation's No 3 mobile operator, but Morrow firmly believes the telco is on the right track to recovery.
Under his watch the company has upgraded its mobile network, launched a superfast 4G network, boosting quality and download speeds, and aggressively cut costs as it transforms into a more agile telecoms company.
By the end of this week the "3" mobile brand, Australian first operator to launch 3G services, will be gone and soon so too will the Crazy John's brand that Vodafone bought in 2008. But Morrow says it's all part of the plan to become a company that ruthlessly focuses on always putting the customer first.
Across the Tasman Vodafone's New Zealand counterpart is in a very different position. The mobile operator there is New Zealand's leading provider with more than 40 per cent market share versus its Australian counterpart's 20 per cent.
If he were an Australian, Morrow would probably be annoyed that the New Zealand sister operation is so successful but the San Franciscan sees opportunity where others see defeat.
In moves to exploit the trans-Tasman and wider Vodafone relationship, Morrow recently unveiled plans to allow Australian customers who travel to New Zealand, the US or Britain to avoid costly global roaming charges by using their domestic mobile services for an additional $5 a day.
The move was a first for Australia's ultra-competitive mobile market and prompted Optus to follow suit last week with similar-themed global roaming plans. The industry is eyeing Telstra for the next move.
The changes are set to continue at Vodafone this week as it prepares to unveil new mobile plans to woo customers back by emphasising strong customer service and simplifying the way subscribers are charged for voice, text and data.
Morrow says the plans are not only about winning market share back from Telstra and Optus but, crucially, about changing the cost structure of the Vodafone business so it better aligns with the usage behaviours of its customers. "Our cost structure needs to fundamentally change. We have to make sure that we gear and design for a video-based network," he says.
As a core part of that strategy, in June Vodafone switched on 4G mobile services in parts of Sydney, Melbourne, Brisbane, Perth, Adelaide, Newcastle and Wollongong. The company says it plans to treble its 4G coverage by the end of this year.
Vodafone was the last of the nation's major mobile players to turn on its long-awaited 4G network but Morrow insists the telco is better placed than its rivals to capitalise on the demand for superfast mobile services.
"We didn't even have a 4G plan when I arrived at Vodafone last year. And now not only have we caught up but we have actually leap-frogged some of our competitors because of our spectrum holdings," he says.
"We are already better than Optus and in certain cases we are better than Telstra, and that's just on the 3G side."
Morrow is betting the customer declines that have plagued Vodafone for the past three years are set to reverse, with gains to be recorded as early as the beginning of next year.
"It has been a systematic improvement whether you look at performance statistics, the resiliency of the network, or customer service," he says.
"We are tracking the losses every week but the losses are declining. It's as though we are taking on a hill with shackles on our ankles and one arm tied behind our back.
"When Australians see all the things that we are going to do there will be respect for our brand knowing that we had some handicaps going into this."
Mitchell Bingemann travelled to New Zealand courtesy of Vodafone Australia and Virgin Australia Airlines.
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