CEO Survey 2019: Inaki Berroeta, Vodafone

Vodafone CEO Inaki Berroeta. Picture: Hollie Adams

Every year The Australian’s John Durie asks some of the biggest names in Australian business five key questions about what’s coming in the year ahead.

Here is what Vodafone’s Inaki Berroeta sees ahead in 2020.

Read more from the CEO Survey.

How is your company affected by low-interest rates and what is needed to boost the economy?

Given the highly competitive nature of our business and our level of investment, low-interest rates are welcome. We also welcome the Government’s plans to invest more in infrastructure nationally and believe that is a good way to boost the economy. We need to create an investment environment that works for businesses and provides value for consumers and at the same time, ensures the right protections are in place.

What is the impact of government regulations on your company, including those applying to the financial sector?

Regulation has a fundamental role to play in ensuring businesses operate as required. But it’s also very important that businesses don’t forget their responsibility to the community in the way they operate. In essence, they should not depend on regulation. Regulation has impacted our business and our ability to compete. The ban on our network supplier following the government’s security guidance and the decisions that have prevented our proposed merger with TPG have held us back from competing more effectively in the market.

What percentage of company revenues are spent on research and development, and how is your company using technology to improve performance?

Telecommunications is a global-scale business, so much of the critical major R&D is undertaken at a global level in partnership with key vendors. We invest significant resources directly, and via our two major shareholders on research and development, and in partnership with our suppliers. We are also fortunate that by deploying technology infrastructure, we can enhance the way Australians access that technology.

What are the three major policy issues facing the country and what should be done about them?

● Australia seems to have an ambiguous position on incumbent firms and competition. At times it seems that there is a desire for more competition, but there is also strong pressure to protect incumbents. One of the challenges is that regulatory interventions are fragmented, and that creates a risk where this fragmentation doesn’t constructively address the market. I see the role of regulators to improve the market, not to unnecessarily create regulation.

● Energy and the environment will be an ongoing significant policy debate. Ensuring Australians have access to affordable and sustainable energy, while at the same time taking care of the environment will be key.

● There are also questions relating to our foreign trade relations. Given the various conflicts around the world, Australia should position itself in a way that it doesn’t put itself at a disadvantage. Ultimately that is to ensure that no future business or future international market investment is put at risk.

What are the major impediments to long term growth facing your company and what can or is being done about them?

Our proposed merger with TPG is currently before the Federal Court, and we have outlined our vision for enhancing Vodafone’s scale to drive more value for customers and bring true competition to a sector which has been a duopoly at best. But we also operate in a sector where the structure of NBN Co by the Government has caused a significant distortion in the way public spending has been distributed. I believe that has put Vodafone at a disadvantage, and I don’t think the regulators have truly taken this into account. We’ve also been penalised by decisions around vendors, and yet our plan is to invest in a merger that will create very strong competition in the market to break what is a duopoly at best.