Vodafone should go retail-only: Analyst

Vodafone has been "struggling" to to keep up with Telstra and Optus as an infrastructure player, according to analyst

Vodafone Australia should consider ditching its infrastructure business and instead focus on being a Telstra or Optus reseller, according to one of the country's leading telco analysts.

BuddeComm director, Paul Budde, told Computerworld Australia that the telco has been struggling to keep up with Telstra and Optus as an infrastructure player since its merger with Hutchison Telecommunications back in 2009 and the more recent “Vodafail” network issues.

“I think they’ve lost significant terrain and the question is if they’ll ever be able to become a big enough player that it allows them to invest in infrastructure,” Budde said.

Following the merger, Budde said the telco made a mistake in continuing with second generation (2G) mobile technology, as opposed to 3G.

“They missed the customer base that would have propelled them to a similar size to Optus and Telstra and they’ve been struggling in that respect from the very beginning,” he said.

“The reality is that perhaps in the longer term Vodafone should start looking at a wholesale relationship with Telstra and Optus rather than trying to keep up with them and missing the fundamental size that allows them to be an infrastructure player.

“Before the infrastructure problems, they already had problems with gaining momentum after the merger and it only becomes tougher to catch up,” he said. “Telstra and Optus are on a roll, there’s nothing there that will easily go wrong that would give Vodafone an opportunity to move in their direction.”

Vodafone will find it increasingly difficult to invest in the likes of spectrum and long term evolution (LTE) technologies down the line, Budde said.

“It’s highly unlikely, based on the current situation, that Vodafone can maintain its leadership in infrastructure which is where it’s struggling… they don’t have enough subscribers to pay for the investments needed.”

The comments follow the telco’s announced plans to overhaul the company’s structure, which will result in staff redundancies.

A Vodafone spokesperson confirmed the company’s sales and marketing units will be merged into one division and will report to the director of sales and distribution, Noel Hamill. The communications and corporate affairs department will also report to Hamill.

The spokesperson could not confirm the number of expected redundancies across the company. However, the company’s chief marketing officer, John Casey, and director of communications and corporate affairs, Tanya Bowes, have been made redundant from their positions.

“We are currently exploring other opportunities for both of them,” Vodafone spokesperson said.

The restructure will have no impact on the telco’s $1 billion network upgrade, the spokesperson said, which it kicked off last April and will replace and upgrade 8000 of its network sites over 18 months.

Follow Chloe Herrick on Twitter: @chloe_CW

Follow Computerworld Australia on Twitter: @ComputerworldAU

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