Vodafone restructure comes after torrid few years: The telco’s five biggest mistakes

Vodafone announced another 500 job cuts yesterday as part of a restructure, saying the company is working on making sure it dominates one of the top three spots in the Australian telecommunications market.

But Vodafone’s problems extend far beyond the most recent network troubles.

Security breaches, not anticipating enough demand during holiday periods and an entire failure to predict the onslaught of smartphones means Vodafone is now stuck in third place. If it doesn’t play its cards right, it could end up being edged out of the market.

The company itself admits as much. Chief executive Bill Morrow told Inside Business earlier this year the telco simply didn’t invest in itself as much as it needed to.

“We now see that, we know exactly what the root causes are, we are investing a lot of money into the company [to] be able to bring that back so the customers can have that choice.”

Vodafone’s announcement of a “significant reduction” in its workforce will help it become a leaner operation. But there’s still more to go. Vodafone still outnumbers all the other telcos when it comes to consumer complaints, according to the latest telecommunications Ombudsman report. And network issues still abound.

The backlash against Vodafone hasn’t been sudden, but rather a build-up of failures and mistakes. Here are five of the company’s biggest:

1. The 2011 Easter mishap

Over Easter Sunday last year, Vodafone’s network crashed. Customers weren’t able to send text messages or, in some cases, make calls. It was a huge disaster, with social media filled with customers outraged the telco failed on one of the biggest holidays of the year.

A telco cannot fail during one of the biggest holidays of the year. If a Telstra network crashed on Christmas, there would be a furore. A telco’s work during a holiday is like a data centre – it just cannot be allowed to fail.

Customers took the mishap as yet another reason to join a class-action lawsuit against the company. It may not have ruined Vodafone, but it certainly added to the swell of negative attention headed its way.

That negativity came to a head when Vodafone revealed it lost 375,000 customers in 2011.

2. A huge security breach

Back in January 2011, Vodafone suffered a security breach that saw passwords and other personal data become accessible through a web portal. It was a significant breach in a year filled with security attacks against companies both large and small.

The Australian Privacy Commissioner even got involved.

To its credit, Vodafone terminated the employees responsible for the password leak. But the damage was already done. An insufficient policy for securing passwords meant outsiders could gain access to private information.

This mistake isn’t just a lesson for major telcos, but SMEs as well – lax security will be your downfall.

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