Regulatory Framework Analysis For Vodafone In Australia

Overview of Vodafone in Australia

Corporations face a number of challenges while operating in the global scenario (Noble, 2008). There is multiple number of regulatory frameworks and guidelines that corporations needs to abide by in order to comply with requirements. An increasing number of corporations are opting for global expansion for enhancing the scope of the market within which they operates. The scope of the current report concerns with the discussion of a British multinational Vodafone. Vodafone is a large company that operates in a number of countries of the world. Australia with its robust population and various infrastructure offers potential for companies to grow and expand (Bowman, 2008). The scope of the current discussion pertains to the Company regulatory framework analysis and any scope of treaties or similar structures that it needs to comply with while operating in Australia.

Vodafone is a multinational corporation that operates in various parts globally in the telecommunication sector. The Company has been formed with the merger of Hutchinson 3G and Vodafone. The merger created a large company that consists of nearly 7.5 million customers making it the third largest company in the country (Stiglitz, 2007). Vodafone’s main headquarters is based in London in the UK. It is a highly profitable Company with over 120,000 employees globally. It currently operates in approximately 152 countries globally. The Company operates in telecommunication sector by offering its customers with various products as fixed telephones, mobile phone connection services, internet services, wireless broadband and so on. The Company was set up in Australia in the year 2009 with its headquarters located at North Sydney. The current CEO of the Company is Inaki Berroeta and Frans de Wolff. The Company employs over 4800 employees in the country. The Company provides the best rated network and quality connection services to its customers but it is a bit expensive compared to its peer group products and services. The Company caters to its customers for various products through its number of retails stores present by Digicall, GSM, Inside Mobile and First Mobile (Fels, 2010). It is currently expanding at a rapid rate in Australia to provide services to various consumers and expand its current scope of the market. The Company while operating in Australia needs to meet with the compliance and governance requirements in the country and abide by frameworks provided in the industry standards. The Company has a well-structured compliance and governance that provides it an initiative to operate in various countries of the world especially in stringent countries as Australia.  

Compliance and Governance Frameworks

Australian Communications and Media Authority (ACMA) is a government statutory body that operates within the scope of media and telecommunication sector in Australia. The body was established to ensure that all operators in the telecommunication sector especially complies within certain norms and legislations such that they can operate in accordance to code of practices provided (McDonnell, 2011). Vodafone in Australia needs to comply by and adopt norms provided by the body such that it is capable of meeting its due diligence and compliances in a better way. The scope of the organization pertains to maintaining and in overseeing various functionalities that operators in the industry might perform. Its scope for performance relates to the following; 

• Reviewing of codes and standards of practices as specified in the industry(Ferner, 2012). The telecommunication sector has various codes of performance and governance structures that lays immense importance on consumers as the most important stakeholder. The body sees that whether consumers are provided adequate services for appropriate costs and companies perform their services accordingly. Vodafone needs to comply with such codes of practices and cannot charge its customers beyond the regulatory requirements as provided (Backer, From moral obligation to international law: Disclosure systems, markets and the regulation of multinational corporations., 2007). Further, the Company comply with all possible sets of standards as given by the body. This act provides a better brand name and brand value for the Company hence helps attracts large number of customers with its governance.

• The body reviews all flexible licensing requirements for each companies within the purview of the industry(Shams, 2012). While there are various licensing and other necessary requirements to operate in the telecommunication sector, especially in broadband and internet services Vodafone needs to comply with such requirements. The sharing of towers for providing services in cities and suburbs for networking is an integral aspect of this functionality.

• Regulatory framework provides for Do not Call Register. This is a data base register that Australians can register their telephones as well as fax numbers for reduction in telemarketing and other possible hoaxes(McGraw, 2010). It’s a very integral requirement for Vodafone in Australia to abide by such register numbers and not call them as there are set out rules helps maintain industry standards. According to this act any Company non-complying to such procedure can complain to ACMA, which then might investigate the matter and enforce necessary actions on the same.

• Industry regulatory framework provides for Spam Act as well which prohibits unsolicited commercial electronic messaging with Australian link(Mzembe, 2014). Vodafone has to maintain integral steps and actions that bars any person from sending specific content of messaging with certain exemptions. In case of any relevant complaint the Company might be charged with specific law suit for the same.

• The Companies within the sector needs to pay corporate taxes of 30% along with all other tax requirements for its various stores and offices across in Australia’s several locations(O’Callaghan 1, 2007). This impacts the Company highly as such taxes are paid for the revenue generated by the Company hence lowering profitability.

• The Australian Internet Security Initiative and malware protects users from being compromised. This offers protection of various devices from malicious software and malware. Vodafone needs to incorporate norms that helps protection of its users as it impacts can lead to serious failure on governance and brand identity issues by the Company.

• Vodafone has to abide by employment and employability norms within the country that provides for health and safety principles, diversity norms, basic pay and similar other norms. Employment norms affect and impact the Company deeply as it helps cater to a number of Trade Union laws and legislations requirements (Muchlinski, 2007). Vodafone in Australia has to abide by and adhere to specific norms in the country for employment as there is protection and laws that prohibit employers from exploiting their employees.

Australia is an open economy and its government has initiatives several initiatives to attract various multinationals towards its country. However, the taxation system in the country is not very exciting for multinational corporations. There has been a number of reviews made in the recent years for the international business tax (Backer, Multinational corporations as objects and sources of transnational regulation. , 2007). The current changes in legislations has targeted technology companies to a large extent especially with its several implications on the multinationals. There are specific jurisdictions for overseeing the tax compliances of multinational corporations. The ATO primarily targets companies in Australian market presence that has revenues in excess of AUD 1 billion, in which Vodafone is included. Australia has also included OECD standards within its country. However, the implementation of such standards have cost immensely the returns are yet to be assessed. Telecommunication companies present in Australia as well as multinationals has to abide by all regulations and compliance requirements. The telecommunication treaties needs to be signed by each and every company that operates in the telecommunication sector of the country and for multinationals there are stringent compliance practices. Each and every multinationals application is especially dealt with and their compliance requirements are assessed such that any form of tax avoidance can be traced. While all laws and regulations in the country remain applicable for corporations the Accounting Standards and other governance procedures becomes impending on multinational corporations. Often it has been identified that multinationals had to pay high amounts in taxes as well as other penalty rates for not adhering to requirements and meeting specifications.

Vodafone is deeply impacted by stringent norms and judicial practices in the Australian market. Though the country’s legislative, political and economic situations remains welcoming for multinationals. Bur deeper and more critical analysis reveals that there are more bureaucratic interventions, legislative and economic standards specification along with other norms for such corporations. The various products of Vodafone have to be offered at competitive rates and often at prices lower than costs for meeting statutory requirements and specifications. These all impending features have raised costs pertaining to various products of Vodafone offered in the market making it less competitive. While the corporation aims to functions at competitive structures but the scope of legislative practices prohibits the Company from doing so, leading to its deduction in market share compared to the Australian rivals. Australian companies enjoy various features and additional benefits from the government, hence it can be concluded that Australian governmental policies are unwelcoming for multinationals and is supportive for its indigenous companies. Such aspects of the business have hurt Vodafone’s profitability continuously, raising the company’s cost structure. The taxation and consumer protection policy is further intriguing that makes companies in the market all the less competitive in nature.     

Regulatory Challenges and Impact on Vodafone

Recommendations and Conclusion 

Vodafone in order to operate profitably in Australia needs to adhere to norms and regulations as provided by the government. The rise and globalization of the telecommunication sector has impacted lives of various individuals and companies. It has enhanced scope of marketing and extend marketing concepts for many a corporation. However, there must be adequate checks and maintenance that prohibits from misuse of such services for their personal benefits. As Vodafone operates in an extremely dynamic environment characterized by fierce competition it becomes indispensible that it abides by all regulations and practices. There are multiple acts and various forms of legislations that are included and updated daily in the sector with various pertinent industry requirements. Complying with such standards and maintaining and protecting privacy with security concerns of its consumers will enable the Company to attract more customers towards its products and services. The following recommendations will help the Company meet due diligence and regulatory framework structures.    

• Adhering to standards and meeting specifications pertaining to Spam Act and Don not Disturb call registers.
• Meting standards and specifications for internet, broadband, mobile phone and fixed line services. Catering to best possible standards in quality to customers at cost effective rates.
• Disclosing all relevant aspects of their services to customers and not excluding any relevant portions of their costs. This will enable adhering to consumer protection.
• Hiring employees and providing them basic pay, protection and health safety principles norms. Such norms and principles will help the Company meet requirements pertaining to employment practices.
• The Company also needs to meet other regulations and guidelines for its particular stores, offices in terms of tax payments and other compliance requirements and so on.   

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