Vodafone woes in Japan deepen

Vodafone yesterday sent more executive firepower to its ailing Japanese business, after the unit lost nearly 60,000 subscribers in January, the biggest drop for any Japanese mobile operator in a single month.

Mr William Morrow, president of Vodafone UK, is returning to Japan to take on the role of president. Mr Morrow formerly headed Vodafone's fixed-line operations in Japan before they were sold off in 2003.

Mr Shiro Tsuda, who was lured from rival NTT DoCoMo group and named president of Vodafone's operations in Japan just two months ago, is to become chairman.

Mr Tsuda's appointment as president was widely hailed as showing Vodafone was serious about rebuilding the business in Japan.

The sudden management change and embarrassing net decline in subscribers highlight the difficulties that Vodafone is having in Japan.

Mr Morrow will become the fourth president at Vodafone's Japanese subsidiary in the past three and a half years.

Japan is a key market for the group, accounting for 20 per cent of global group revenues. However, the business has been losing market share to rivals such as NTT DoCoMo and KDDI.

Vodafone lost 58,700 subscribers in January, the worst performance by a mobile operator in Japan. Of the three big operators, Vodafone is alone in reporting a net loss of subscribers on a monthly basis.

One fund manager said: "Declining subscribers of this magnitude could be the death of a brand."

At the same time, average revenues per user has continued to decline in Japan amid fierce competition.

The poor performance in Japan is in contrast to the rest of the group. Vodafone recently reported its best Christmas since 2000, with subscriber numbers growing to more than 150 million.

Vodafone has taken a global approach to its mobile operations, launching the same range of 3G handsets worldwide. Hitoshi Hayakawa, telecoms analyst at Credit Suisse First Boston in Tokyo, said: "Trying to position Japan within Vodafone's global business does not work because change in the Japanese market is much faster than in other markets". Mr Tsuda admitted "customers are leaving Vodafone or are not choosing Vodafone.

Last May Vodafone announced a turnaround programme for the business, which would take between 18 and 24 months and would involve new handsets, brand building and voluntary redundancies to cut costs. - (Financial Times Service)