More Troubles For Vodafone Japan
By Carlo Longino, Tue Feb 08 00:00:00 GMT 2005

On the back of a net loss of nearly 60,000 subscribers, the CEO of Vodafone KK has stepped aside just two months after taking the job.

Vodafone KK hired Shiro Tsuda away from rival NTT DoCoMo, hoping his experience at turning that carrier's fortunes around would help Vodafone reverse its fortunes, but after just two months at the helm, Tsuda has stepped aside and called for backup from the home office in the UK. He'll be replaced as president on April 1 by current Vodafone UK CEO William Morrow, though he will remain on board as executive chairman.

While NTT DoCoMo gained 184,400 net subscribers in January and KDDI added a net of 165,200, Vodafone lost 58,700 -- the worst monthly performance by a Japanese carrier in history. Tsuda conceded this week that he was struggling to run local operations while managing a relationship with the rest of Vodafone's global operations, something that has become increasingly important in the company, both because of its "One Vodafone" strategy that leverages economies of scale by procuring handsets and systems across its geographic footprint, and also because Vodafone looks to its Japanese operations for innovations it can expand across its other units -- like it did with the underpinnings of Vodafone Live!.

The range of 3G handsets the operator announced in November don't seem to be helping Vodafone turn the tide. Finding handsets consumers liked has been the key to both the runaway growth of KDDI's CDMA1x network, as well as the revival of NTT DoCoMo's FOMA 3G network as a serious rival. While getting a jump on exporting Japanese-designed or -influenced handsets might help Vodafone in the rest of the world, pushing handsets from the west into Japan, where consumers expect a much higher level of sophistication, doesn't seem to be a strategy for success. Indeed, it's these handsets, and the slow pace at which the company rolled them out and makes other service and pricing changes, which has been its downfall.

There's speculation, too, that the lack of success has Vodafone preparing to exit the Japanese market, though with its unit there responsible for 20 percent of total revenues, it would be something of a surprise. Some analysts point to the fact that new president Morrow was in charge of Japan Telecom Holdings, a fixed-line business Vodafone acquired along with mobile operator J-Phone, when it was sold off as one indicator -- though, of course, he's been leading Vodafone UK, which at last check hadn't been sold off yet. In any case, a turnaround in Japan will require lots of effort, time and money, things Vodafone may not want to invest in the sinking business.