SMEs on Vodafone’s path to redemption

Vodafone Hutchison Australia is looking to entice Australian businesses on to its network.

Vodafone

Vodafone Hutchison Australia is looking to entice Australian businesses on to its network, with the boss of parent company Vodafone Group saying it is ready to steal market share from Telstra and Optus.

Vodafone Group chief executive Vittorio Colao told The Australian yesterday that the mobile carrier had not only exorcised the ghosts of “Vodafail”, which almost brought the telco to its knees, but was now actively exploring avenues of growth in the Australian market.

“We have a 5 per cent market share in business enterprise (in Australia), usually we have 30 per cent; we don’t have fixed-line (infrastructure) and in most places we have an urban and rural presence but we tend to be urban here,” Mr Colao said.

Increasing that 5 per cent footprint is high on the list of priorities for Vodafone’s local chief executive Inaki Berroeta, who said the carrier did not have to go head to head with Telstra to make inroads in the enterprise markets.

“We always go into areas where we believe is a chance for us to add value, and we see small to medium businesses as that area in Australia,” Mr Berroeta said.

“The reality of Australia is that a lot of the large businesses are well served but this economy is well served by many enterprises that don’t get the attention they need.”

Addressing the growing needs of the SME space is likely to be foremost in the mind of all local telcos and the strength of their respective networks will be crucial as businesses look to use mobile data services. The disruption of Telstra’s mobile network this week has highlighted that even relatively short outages can take a severe toll on internet and traditional businesses.

Vodafone is no stranger to the damage a poorly performing network can have on the company bottom line and reputation. Widespread outages across its 3G network in 2011 saw Vodafone lose millions of customers, with its customer base sliding to 6.8 million in the space of 18 months. It has since clawed its way back to stability but its limited access to fixed-line infrastructure in Australia is seen as a weakness.

According to Mr Colao, it’s an area that the telco is looking to address and the end game for all carriers is convergence — where fixed and mobile infrastructure are integrated.

“Australia will find its own way, Inaki will find the right strategy and together with Hutchison we will provide the path,” Mr Colao said.

Vodafone’s billion-dollar deal with TPG Telecom last September, hints at the type of strategy Mr Berroeta is looking to pursue. Under the terms of the deal, TPG will extend its current fibre infrastructure to encompass the majority of Vodafone’s mobile towers. The fibre provides Vodafone access to much-needed backhaul allowing it to strengthen its 4G mobile coverage across the board.

Building a robust core network is one thing but the local telcos are also looking to deliver a number of other services to consumers. Vodafone has made significant inroads in the consumer market with its roaming plans. Its $5-a-day roaming service is a hit with users.

According to Mr Colao, the Australian market has been particularly receptive to its roaming offers.

“The take-up of the roaming offer in Australia is the highest we have in the entire Vodafone Group globally,” he said.

Mr Colao, however, is not getting caught up in the hype around 5G networks, saying that it’s far too early to get excited about it.

“5G has not been defined yet and the business model for it is still unclear and it won’t be real until 2022.”