Vodafone Ukraine: Becoming Truly Customer-Centric

In a partnership agreement between MTS and Vodafone, MTS Ukraine is operating under the Vodafone brand. As Ukraine moves to 3G, the company is speeding up the process by utilizing Vodafone's extensive 3G experience. According to Olga Ustynova, CEO of Vodafone Ukraine, the branding deal has not only improved the network but has also changed culture, behavior and people. Her business philosophy is to make both the customers and employees happy.

Could you tell us about your experience at MTS and what has led you to become CEO of Vodafone Ukraine?

I have been working in the telecom industry for more than 20 years. Telecom is my life. I worked as a leader of the Kyiv area office of MTS Ukraine for four years, and then managed the Far East macro-region of MTS for one year. If someone had told me five years ago that I would go to the Far East and then become a CEO, I would have just laughed. But this is what happened. When I realize the excellent potential I have and feel I am quite a genius amongst peers, then at some point, eventually, I reach my ambitions and then the career development stops. What a pleasure it is to realize that your ceiling is someone else's floor! When I start feeling comfortable, I try to leave my comfort zone and try new things. Even my parents sometimes hardly understand the things I do.

How would you describe the Ukraine market and your position in it? What unique dynamics do you see in Ukraine's market?

Ukraine's market is very competitive with three major operators. We have just started construction of a 3G network because we didn't have any license for this before. We are No. 2 but we have huge ambitions to become No. 1 in Ukraine.
With 3G launch in Ukraine, we are now establishing a new phenomenon called app economy. In 2016, users spent nearly 900 billion hours on their smartphones (analysis excluding China). This means that an average Android user devoted about two hours a day to apps. Vodafone is leading this trend in Europe, and now in Ukraine. Each of our customers has on average about 20 apps installed in his/her smartphone, including our own apps, such as Vodafone TV, Vodafone Music, Vodafone Books, Vodafone Pay mobile wallet and the most convenient self-service app―My Vodafone. Digital content is driving consumption and the industry in general. From December until February alone, the number of Vodafone TV subscribers grew by 1.5 times, and Vodafone Music, which was launched late in November, was downloaded over 50 thousand times.

What are your priorities now?

We are all changing our behavior because we are becoming Vodafone now. The client is central to all of our models. We create our network in European style. We have huge KPIs like those in European countries. We need to provide our customers with the best network at the highest speed. Also, we disrupt the market for roaming tariffs. In 2016, our tariffs for roaming decreased by 19 percent. We are the first in the market to provide unlimited calls abroad for a monthly payment. It has been very successful. 

What transformation has taken place since you were rebranded to Vodafone Ukraine?

We are changing our brand in all our shops. It's also a change in culture, people and behavior. We've changed half of the employees in shops. It's absolutely a different logic. The strategy is to make services more open and friendly. We have special tables where you can experience Top 10 mobile phones before you buy one. Our staffs do not sit down at desks. They move around the shop and assist with contracts. We also make our processes faster and simpler. We take the best solution from Vodafone Group.
We are pushing everybody to provide themselves with services now. We believe that shops have to sell and not provide services. If customers come to our shop and ask for services or complain, for me it means we have not done a good job. We are trying to understand each complaint. We don't have a target, for example, to solve complaints from customers within 24 hours. Our goal is that customers should have zero complaints. If you need support, you can use your smartphones to contact us via social networks like Facebook. We can give answers to any questions very quickly.

Where are you now in the process of digital transformation?

Going digital is not simply a strategy of our company. It's deep in our DNA. We use this term not only for new products―it is the foundation for all interaction inside the company. We have one of the most innovative headquarters in the country with cloud implementations based in our own data center. We switched to the electronic document management a long time ago, and customer relations are increasingly moving to digital channels as well.

How have you improved your 3G network and revenue?

One of the benefits of operating under the Vodafone brand is the new network and business standards. Thanks to our thorough network planning and the higher capacity of 3G network, we meet and even surpass the higher network quality requirements of Vodafone's international standards. The users respond right away with increased consumption. Traffic grows dramatically, along with data revenues―in Q4 2016 we generated 97% higher data income than that during the same period last year. We are the only operator on the market that has increased the  OIBDA margin, both in Q4 2016 over Q3 2016 and in 2016 over 2015.

Is there any challenge in your 3G network deployment?

There are a lot of challenges. You know our country is late in technology. We have a very short time for construction. Of course, we are choosing partners that can support us and do the job well. We have to be fast in each question. ZTE supports us well. They solve our problems in a short time. I believe they work 24 hours. I don't understand how they can achieve such a job.
As I said before, we have a deal with Vodafone. They set us a target of network quality. Quality is very important for us. We adopt a different strategy for 3G. The other operators use the 2G/3G co-site solution. They only have 2G base stations and just bring 3G inside. That's all. We bring an additional 30 percent of 3G base stations to create a wide coverage.

How about the smartphone penetration on your network?

The smartphone penetration now is just 40 percent. It means 60 percent of our customers cannot use data. It is also a challenge for us. Previously we sold mobile phones in chain stores. We've decided to sell smartphones ourselves. We'll even do it without any margin, just in order to get revenue from network usage. We will propose monthly payments to customers so that people will have the possibility of paying a low monthly amount of money and changing their feature phones to smartphones. Meanwhile, each shop will create zones to show the opportunities people will get with smartphones. For example, they can use their smartphones to pay for electricity, control their financial account, watch TV programs and read books. 

What comments do you have on your cooperation with ZTE?

Ukraine is still actively building the 3G network. In some regions, we are launching 3G in cooperation with ZTE. Considering very tight launch timelines and high expectations of our customers in terms of network quality, we are quite happy with our partnership with ZTE. We welcome ambitious market players, as this creates a healthy competitive environment, which ultimately brings value to our customers.

How would you describe ZTE as a partner? What's your expectation for future cooperation?

You know it's the first time that I cooperate with ZTE. In the beginning, I was very careful. My previous experience was with European vendors. We had worries such as "do you ensure good quality?", "if you have problems, how fast will you solve them?" and "what's your reaction in the case of complaints?" But when I came back from Russia and began to cooperate with ZTE, I was a little surprised because the quality is excellent.
In Ukraine, it's easy to change prices and quality but it is very hard to change the brand. We are pushing our technical guys to communicate more deeply with our vendors because if something happens, it is a problem for both the operator and the vendor. Now we have got good experience and we continue to negotiate with ZTE. This year we have decided to give ZTE a larger share of our network project because we are satisfied by the results. If we compare our network with those of our competitors, I believe we are No. 1 in the market.

Where will the telecom market in Ukraine go in the future?

Although we still have weaknesses in technology we will enter the digital world very soon. The future telecoms will be smart operators that will invest not only in capacity and network but also produce certain special services for customers. This tendency is driven by the ideas such as "we need to increase our capacity, install more equipment and provide higher speed". As for customers, they need new services, not just a higher quantity of services. We need to be very close to customers, understand them well, and provide them with special products, which they need even if they don't yet understand that they need them. We have to estimate what customers will require in two or three years. We will produce the future for them today.

What special services do you offer?

We are developing financial services. We provide customers with services like Wi-Fi calling. If a Wi-Fi network exists, you can use your mobile phone without additional check-in for Wi-Fi. It's useful in the 3G or LTE network. We also provide IoT tariffs for some products including security and charging. We try to understand the needs of customers and make offers to them in a very detailed way. 

Could you tell us more about your IoT efforts?

We are already actively working with IoT. We have special solutions and plans, and not only for business purposes (financial and agricultural enterprises). This year, we have launched a plan for smart devices, which are taking over the mass market. The alarms, heat and light control devices, kettles, and even toothbrushes are now connected. The smart devices are no longer a fantasy, but products you can order in online stores. The number of these devices in our network is growing daily. For these, we offer pre-paid plans, which are available across the Vodafone retail chain with no need for intermediary devices. 

4G is developing fast and 5G is attracting great attention. What's your consideration for 4G and even 5G?

We are very close to implementing 4G in Ukraine. There is now a clear plan for 4G spectrum auction by the end of this year. The credit for this should be taken by both the regulator who has done a lot to resolve the operators' differences in terms of spectrum, and the operators who are ready for a compromise to make the next generation communications happen in our country. However, there are still issues in frequency price, simultaneous bidding for 1800 MHz and 2600 MHz, and implementing technology neutrality and frequency refarming.
Our network is ready for 4G. We are installing the 4G-ready base stations. Last year we successfully tested various solutions in several frequency bands with vendors, and fully switched to procurement of USIM cards that support 4G.
For 5G, we understand that the future is in the internet of things and virtual reality, and we have to prepare the network for the future if we decide to be No. 1. There are also a few issues to be addressed. The first one is the availability of the 5G spectrum. This issue has only been put forward, but not resolved on a global scale. The ITU expects this technology to be standardized by 2020. The second issue is the need for investments in network building. From a business point of view, the normal period for switching from one technology to another is four to five years. This is the period over which investment in the network pays off and, consequently, the business can start investing in new technologies.
 
What's your vision for your company?

Vodafone Ukraine is primarily focused on our customers, both external―our subscribers, and internal―our employees. A successful business today is not just about money. The essence of today's business is love by customers and staff. This philosophy, still a little unusual for Ukraine, is standard in Europe. In the developed markets, this is called a customer-centric approach, and nowadays we are implementing it in Ukraine. It's reflected in many tiny details―no toxic services, no upselling, clear and simple plans, sincere willingness to help customers. And it already pays off. People feel how the company treats them and vote with their wallets. 
We have strongly contested areas. I believe in big data and IoT. In the future traditional voice and data revenues will reduce. Only IoT and big data will help operators grow against that trend. Now we are trying to change our structure. We have to be agile. We have to provide our customers with a lot of new things and products.

Could you tell us about your customer-oriented approach?

In our company we are launching a special management team. We are checking in on processes to understand why there are complaints. There should be zero complaints. If you have such a team that takes all the complaints, divides the complaints by process and finds out from which process a complaint starts, the next time customers will not complain at least for the same question. It's our main goal for our job.
We have also decided that we should be a company that not only makes customers happy. Our employees have to be happy at the same time. It is impossible to make customers happy if our people are not happy. We try to keep a balance between customers and employees. If both of them are happy, it means we provide the best products in the market. A lot of companies just discuss about customers in their customer-oriented approach, we discuss about customers, both external and internal. My team is also my customers. I should understand all their needs. I believe if we understand them and make our services clear and simple to use, they will be more satisfied and loyal. Thus, we will have the best results in the world.