Vodafone boss labels NBN payments to Telstra ‘outrageous’

Vodafone’s new chief executive Inaki Berroeta has questioned whether the fees the Federal Government is paying Telstra for the national broadband network actually reflect the asset’s worth.

Inaki Berroeta

Speaking at a Trans-Tasman event in Sydney today, Berroeta labelled the $20 billion Telstra will receive over the next decade to decommission the network and transfer its customers onto the NBN as an “outrageous” amount of money which has the potential to create imbalance in the local market.

In a speech centred on ensuring competition in Australia’s telecommunications sector, Berroeta said the “significant” amount of money Telstra is set to receive would “definitely” give it a leg up over other players.

“When you buy something you need to pay what it is worth,” he said.

“Australia has eight million households and is paying $20 billion from public money to connect eight million households. If you do the maths that is a significant amount of money, and on top of that, there is still a lof of investment to be done to make this infrastructure work.

“This is a very expensive purchase. When you buy a car and you pay ten times the value for it, it doesn’t make sense.”

He urged the Government to look at whether its sustained injection of public money to one player for ten years would create a problem for future competition.

He suggested it reconsider the agreed amount, and additionally look at ways to ensure the purchase won’t create an imbalance for the market.

Berroeta said his company, which has the “DNA of a challenger”, wanted to compete and become a strong player in the industry, but would only be able to do so if the Government nurtured a level playing field.

When asked about a continuing decline in subscriber numbers since network and services issues created the ‘Vodafail’ movement in 2010, Berroeta said he was “extremely confident” in the telco’s ongoing efforts to transform.

“I’m also here to create a sustainable business. We’re not here to flood the market with SIM cards and report positive numbers, that’s not what Vodafone is about. We want to build something of value and the numbers will come.”

Vodafone reported a loss of 137,000 mobile subscribers in the six months to June 30 this year, the latest set in several years worth of declining mobile users.

The telco has made a concerted effort to improve its reputation and service in recent times, and has spent $1 billion each year in the last three years to improve its network.

The company had previously committed to a 2014 return to subscriber growth under former CEO Bill Morrow, but since his January appointment Berroeta has declined to recommit to the forecast while Vodafone worked to shake negative perceptions around quality of service.

He today announced the telco's latest move in the transformation agenda, a deal with Ericsson to overhaul its core network. The project will in part facilitate the introduction of voice over 4G (VoLTE) technology, which will make Vodafone the first Australian telco to deliver voice calls over 4G.