Vodafone Australia: Engineering a Comeback

On June 10th, 2009, two companies came together with a plan to shake up the Australian wireless telco market. Vodafone Australia Limited—owned by the gigantic UK-based Vodafone Group—and Hutchison 3G Australia Pty Limited—owners of the “3” brand and subsidiary of the even larger Hong Kong-based Hutchison Whampoa—made sweet financial love and gave birth to a new telco. They ingeniously named it Vodafone Hutchison Australia Pty Ltd, the business equivalent of a hyphenated surname.

We know it today as simply Vodafone Australia.

That baby has had a troubled upbringing since its 2009 inception and only lately, has it been getting the love and attention it deserves.


When the merger of two of Australia’s four mobile network operators was announced in February 2009, it was generally well received. So well in fact, that it was deemed almost entirely necessary to continue robust competition in the Australian wireless telco industry. The Australian Competition & Consumer Commission (ACCC) in their assessment of the merger (before later approving it), stated:

“The ACCC examined a large amount of evidence which indicated that Hutchison and Vodafone, on an individual basis, would not be likely to continue to make the investments in their networks that would be necessary for the delivery of high-speed MBB (mobile broadband) services. Without the merger, it was likely that Hutchison and Vodafone would become increasingly weak competitors over time relative to Telstra and Optus.”

The outlook was rosy, with two price leading network operators pooling their resources to take on the significantly more cashed up and entrenched competitors, Telstra and Optus. Consumers will get more innovative products and services, at lower prices, across the industry.

What could possibly go wrong?

Vodafone's crashed car

credit: Flickr user KAM=//=DHATT

As of today—mid-2013—Vodafone still sits as a clear 3rd competitor to Telstra and Optus for customer base and is losing money hand over fist.

Latest numbers from Vodafone Hutchison Australia (VHA) show they have over 6.6 million customers as of December 31st, 2012[1. Hutchison Telecommunications (Australia) Limited Annual Report 2012, pg 2], which is more than what VHA had when the merger begun (6.3 million in June 2009)[2. Hutchison Telecommunications
(Australia) Limited – 2010 Half Year Results, pg 5
], but is down from a peak of 7.5 million customers in December 2010[3. Hutchison Telecommunications (Australia) Limited – 2011 Half-Year Results, pg 5].

Shedding approximately 1.2 million customers (or a 12.8% decrease) in 2 years isn’t the total capitulation of Vodafone’s customer base, as the media may have lead you to believe. In that same period however, Optus started off with 8 million[4. Singapore Telecommunications Limited And Subsidiary Companies – MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION, RESULTS OF OPERATIONS AND CASH FLOWS FOR THE FIRST QUARTER ENDED 30 JUNE 2009, pg 40] and grew to 9.5 million (a 19.5% increase)[5. Singapore Telecommunications Limited And Subsidiary Companies – MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION, RESULTS OF OPERATIONS AND CASH FLOWS FOR THE FOURTH QUARTER AND YEAR ENDED 31 MARCH 2013, pg 51]. Telstra grew its customer base from 10.2 million[6. Telstra Full Year 2009 Financial Results – CEO/CFO Analyst briefing presentation, pg 3] to 14.4 million[7. Telstra Financial Results for the Half Year ended 31 December 2012 – Analyst Briefing Presentation, pg 12] – an incredible 34% growth in subscribers. In comparison, Vodafone only grew a rather mundane 4.5%.

The merged Vodafone and Hutchison entity has also had financial difficulty, with the Hutchison part of Vodafone Hutchison Australia reporting a $73.4m profit in 2010[8. Hutchison Telecommunications (Australia) Limited Annual Report 2010, pg 2], a $175.4m loss in 2011[9. Hutchison Telecommunications (Australia) Limited Annual Report 2011, pg 2], and a $408m loss in 2012[10. Hutchison Telecommunications (Australia) Annual Report 2012, pg 2]. The joint venture is 50/50 between Vodafone and Hutchison, therefore it’s safe to assume that as a whole Vodafone lost around $778m in 2012.

Whatever metrics of success you use (and disregarding your competitors actions), such minimal growth and the loss of over a billion dollars since the merge can’t be a good thing.

A tale of two metrics: value & quality

Putting that aside, the biggest concern for us smartphone and mobile broadband users is value for money. In other words, how good is the network relative to the price charged for it?

Value for money—traditionally Vodafone’s strong suit—has stuck true throughout the merger. With the iPhone 4S launch (the first iPhone released under the single branding of Vodafone), Vodafone had the lowest pricing. It continues to offer this competitive pricing to this day, even including perks like Visual Voicemail for free.

But the former—network quality—man, that went downhill badly, and caused all sorts of trouble for the company. Not simply financially either; it also brought intense media scrutiny, the sacrificing of a CEO, a class action lawsuit and some heat from government regulators ACMA and the ACCC.

It all seems to have begun in October 2010, with this innocuous Whirlpool forum thread bringing all the disgruntled Vodafone customers out of the woodwork. Then in November 2010, an article by Fairfax’s Asher Moses, took Vodafone’s network troubles out of the Whirlpool echo chamber and into the mainstream.

That article lead to the now infamous Vodafail website, which was designed to collect user feedback about Vodafone’s flailing network, where over 19,000 complaints about Vodafone were submitted between December 12, 2010 and March 26, 2012.

Within a month of launching the site, Vodafail’s founder, Adam Brimo, generated a detailed report based on the information collected. Whilst still being anecdotal, the report was damning, giving numbers and analysis (if not entirely scientific), that represented the general feeling of Vodafone’s operations in Australia.

Asher Moses took this report and ran with it, landing the killer blow to Vodafone’s fortunes, and sparking the continuing and wide spread debate on Vodafone’s network quality.

Vodafone themselves haven’t really explained what went wrong. The then-CEO, Nigel Dews, did not elaborate beyond stating bugs in some software upgrades and various teething problems hampered their network. So as for details as to what exactly happened in that period between late 2010 and early 2011? Well, they may never see the light of day.

Things got worse for Vodafone in January 2011, with Fairfax (notice a theme here?) publishing a vague report that all of Vodafone’s customer details were loose on the Internet and that Vodafone employees were using this database of customer details for their own nefarious needs. The Australian Privacy Commissioner, Timothy Pilgrim later reported:

“In the course of my investigation I did not find any evidence that substantiated the claim that Vodafone customers’ personal information was available on a publically accessible website. However, in my view, Vodafone did not have appropriate security measures in place to protect customer’s personal information at the time. Consequently Vodafone was in breach of their obligations under the Privacy Act,”

Whilst Vodafone did have lax customer privacy controls in a specific part of their business, the Fairfax headline claims of customer data as a free-for-all internally and externally at Vodafone were not true.

Vodafone’s reputation of a decent network with value for money was now in tatters.

Unfortunately, the damage was done and Vodafone’s image was further stained in the mind of the Australian public. The legacy of this dark period in Vodafone’s short history is simple; their reputation of a decent network with value for money was now in tatters.

Engineering a turnaround

Vodafone: How are you?

So how do you regain the trust of the market? Even more difficult; how do you engineer a turnaround whilst your competitors pick away at your customer base like vultures, waiting for you to collapse?

With the fortune of hindsight, the two problems that Vodafone had that got them into this position were clear. 1) poor network quality and 2) failing to communicate with customers what those problems were and how they were fixing them.

It’s no surprise that Vodafone’s customer communication in regards to their network is now second to none. This is just a small list of things I’ve noticed Vodafone has done since apologising to its customers:


On the Vodafone blog, there are weekly updates as to what is being upgraded and where. Telstra and Optus don’t give this level of information publicly regarding their mobile network.

Vodafone was first to introduce its own online forum where customers can discuss anything related to Vodafone with Vodafone representatives. This idea was later copied by Telstra and Optus.

A huge frustration of Vodafone’s customers was the Mumbai based call centre. That’s shutting down and Vodafone’s Hobart call center is doubling, making Vodafone the only one of its competitors with a fully Australian-based call center operation.

Vodafone introduced a network guarantee, which their competitors, Optus and Telstra, have not done either. If within the first 30 days of your contract, you find the service unacceptable, simply take your phone back to the store and you’re released from the contract, with minimal fuss.

The Vodafone coverage map details future planned upgrades 3, 6, 9 and 12 months in advance. Again, no other telco gives this level of information regarding its network to the public.


Easily the hardest hitting action Vodafone has taken though is a massive network upgrade. Practically rebuilding and adding hundreds of new base stations (over 1200 new locations in addition to those already existing) with HSPA+ (aka 3G+) and LTE infrastructure from Huawei and Cisco, together with huge backhaul improvements via a PIPE and Nextgen network agreement.

Vodafone also recently completed a joint venture with Optus, which brings the two competitors together to try combat Telstra’s expansive regional coverage. All together, Vodafone has spent $1.7 billion on this round of upgrades, bringing their network up to scratch.

Last to the 4G party, Vodafone can now compete with Telstra and Optus on an equal footing.

Those network upgrades culminated yesterday in the switching on of Vodafone’s LTE network in select areas of Australia. Vodafone can at now finally compete with Telstra and Optus on equal footing. In fact, Vodafone currently has a significant advantage over its competitors in the LTE game, having 20MHz of continuous spectrum, nationwide, unlike Optus and Telstra, who currently have 10MHz.

More spectrum, more good.

Wondering why 20MHz of continuous spectrum is good? Well, the simplest explanation is that spectrum is to wireless telecommunications like the width of a pipe is to plumbing. The more spectrum a carrier has, the more information that can be sent back and forth between your device, just like a wider pipe can handle more water rushing through it at once.

In order to get the maximum out of LTE, using what’s known as Category 4 devices—which are few and far between on the market right now—you need that 20MHz of bandwidth.

So what happens Vodafone release a flagship LTE modem for use on their network? Or your next smartphone has a radio with the Category 4 standard embedded? Well, that’s simple; it should be stupidly fast.

Here’s the downside though, unless the backhaul (the way data gets from the cellular base station out to the wider Internet) can keep up, actual speeds may not be as fast as you might hope. It would be like connecting a dozen huge pipes into a single drinking straw & expecting the straw to handle the flow of all those other pipes. Luckily, Vodafone’s partnership with PIPE and Nextgen networks means there should be somewhat sufficient bandwidth to keep things acceptable.

If you’d like to know more about the intricacies of LTE, check out this article from Anandtech, explaining the rollout and design of Verizon’s LTE network in the USA. Whilst not specific to Australia, many of the same theories apply, and I’m yet to see a better explanation for non-RF engineers.


This change signals (heh, signals) a new phase in Vodafone’s recovery from the dark days of 2011 and 2012. A chance to show us that they’re back in the game, returning to their bang-for-buck reputation. Vodafone has slowed the customer bleeding and financially, the parent companies are in it for the long haul.

With the bulk of upgrades complete and LTE finally available, the Vodafone network has never looked better. Combined with Vodafone’s step-up in customer service and their traditionally low pricing, the child born out of that fateful merger back in 2009 has now grown-up, learned some valuable lessons and is ready to take on the next stage of its life.

The best of luck to you, grown-up Vodafone. The Australian mobile landscape would be much sadder without you.

[optin-cat id=5772]

Reckoner had its humble beginnings way back in June of 2013.

Founded by James Croft, along with Peter Wells and Anthony Agius they created what would go on to become one of Australia’s most highly regarded and award winning independent tech blogs.

With its uniquely Australian voice Reckoner is committed to offering a “no-holds-barred” approach to its writing. Beholden to no one but its audience. Reckoner’s goal is to remain completely transparent and honour the trust it’s built with its faithful readership.

Support Reckoner!
Thanks for stopping by. It looks like you're really enjoying the content so why not help a brother out and pitch in for a coffee.

Your support makes all the difference!