Vodafone Australia boss Inaki Berroeta to prioritise stability over growth

Vodafone Hutchison Australia is about to light up its 5G network in a bid to revive its presence in the local mobile market.

Vodafone CEO Inaki Berroeta Picture: Adam Yip

Vodafone Hutchison Australia is about to light up its 5G network in a bid to revive its presence in the local mobile market after losing 275,000 customers in 2019.

Having managed to overturn the Australian Competition and Consumer Commission’s objection to its merger with TPG Telecom, Vodafone Australia’s first 5G sites are set to go up within weeks. The ACCC has until March 12 to lodge an appeal to the court ruling.

The telco is hoping its accelerated 5G push will help it make up for lost time, with it keeping its head down for the full year ending December 31, and seeing its net loss for the period balloon 125 per cent (year on year) from $124.4m to $279.3m.

Vodafone Australia posted a 7 per cent jump in earnings before interest, taxes, depreciation and amortisation (EBITDA) to $1.17bn for the period.

It was the only bright spot for the telco in the year, with total revenue falling 3 per cent, from $3.62bn to $3.52bn, and mobile average revenue per users (ARPU) falling 4.9 per cent.

It also ceded ground in the market, with its total mobile network customer base falling 4.6 per cent, or 275,000 subscribers, to end at 5.7 million.

Vodafone Australia chief executive Inaki Berroeta said the company had to prioritise stability over growth during an uncertain time for the business.

“We were really put in a challenging situation during the year,” Mr Berroeta told The Australian.

“The decision to not let us use (Huawei) as our supplier of 5G equipment was unprecedented and its impact has been underestimated, it has put us back by at least 12 months. We also had opposition from the ACCC on the merger and the impact of both of these things forced us to make some very tough choices in how we operated in the market.”

One key adjustment, according to Mr Berroeta, has been to prioritise stability in lieu of growth.

“For the last five years we have been growing pretty much on every indicator, but last year we had to make a choice because the last thing we wanted to do was to have any impact on the performance we could deliver to out customers,” he said.

“Capacity planning is something that’s not well understood in the market. We need to manage network capacity not just when you see congestion but actually need to plan for it much earlier than that.”

The telco is currently working on 650 5G sites and Mr Berroeta reiterated that its 5G plans remained on track and a merged TPG-Vodafone would be in a position to claw back mobile market share.

“We are very excited to be pushing ahead with our plans for 2020 by delivering our first 5G sites within weeks, with the initial rollout to continue throughout the year,” he said.

“There will be real opportunity for us to cross-sell services between the customer bases of TPG and Vodafone. As we get more clarity around spectrum we will consider different commercial ­approaches to how we go to the market.

“Customer numbers in this market are influenced by heavy discounting, so there’s a large portion of prepaid customers who take advantage of starter pack discounts and buy a number of lines. We have moved away from counting these lines as new connections and are instead giving them more value on their existing plans.

“That has had an impact on our customer numbers.”