Vodafone Australia reports customer losses of 551K

Vodafone Australia reports customer losses of 551K

Summary: Vodafone Australia's customer losses have continued in 2013, with over half a million customers leaving the company in the first six months of this year.

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TOPICS: Telcos, 4G, Australia
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Vodafone Australia's parent company Hutchison Telecom expects Vodafone to begin to turn around towards the end of 2013, as the company has again reported massive customer losses for the first half of 2013.

Hutchison, which has a 50 percent stake in Vodafone in Australia with co-parent Vodafone Group PLC, today reported half-year losses of AU$95.8 million, which was an improvement on the AU$131.3 million loss for the corresponding period in 2012.

Total revenue was down to AU$1.7 billion from AU$2 billion in June 2012. Hutchison's share of Vodafone's net loss for the six months was AU$109.1 million, compared to AU$138 million in the first six months of 2012.

The company's customer base declined by 551,000 in the six months, down to 6.028 million. This indicates that in the second quarter of this year, Vodafone's customer base declined a further 335,000 on top of the 216,000 who left in the first quarter.

It represents an 11.9 percent drop in customers in the last 12 months, down from 6.8 million in June 2012.

It is understood that Vodafone deactivated over 100,000 inactive SIMs in the second quarter of this year, meaning that the customer loss remained relatively consistent over the six months.

Many of the customers who were leaving would have also have been signed up at the peak of the company's network woes back in 2011, and Vodafone expects that this will be the last before the company begins to see a reduction in the number of customers leaving the telco.

"The turnaround strategy anticipates customer losses to continue for the remainder of 2013, but our underlying churn rate is well within target, and our overall average revenue per user [ARPU] is on track," CEO Bill Morrow said in a statement.

"While there are continued challenges ahead and plenty of work still to do, I'm very confident about the future of Vodafone, and extremely pleased with the progress made."

Vodafone today said that the revenue losses are reducing year on year, and there has been a 68.9 percent increase in earning before interest, tax, depreciation, and amortisation.

In June, Hutchison and Vodafone Group refinanced Vodafone Australia with a two-year, US$3.5 billion loan. Hutchison in its results today said the company is confident that the strategic overhaul of the business that commenced in 2012 will bring Vodafone back.

"Although continuing losses are anticipated in 2013, [Hutchison] expects improvements in [Vodafone's] operating performance through the remainder of the year and into 2014," the company said in its report.

Vodafone last month launched its 4G network across several capital cities and regional areas in Australia. Earlier this week, the company received legal threats from Telstra over claims to have the fastest 4G network in those capital cities in light of the company's high spectrum holdings in the 1800MHz band.

Telstra has since said that restacking the 1800MHz spectrum band has given it similar spectrum holdings in all of the major capital cities, except Sydney and Melbourne, where the company has 5MHz less spectrum than Vodafone.

Topics: Telcos, 4G, Australia

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Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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8 comments
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  • Truth is in the numbers

    Well the numbers have well and truly caught Morrow out. Customers do not leave if the service works for them. It does not matter when they sign up, what matters is what sort of service are they getting when it is time to sign up again. For 550,000 customers to leave in 6 months is an absolute disaster and indicates that rather than things improving as Morrow keeps saying they are actually getting worse. That number 12 months ago was just over 172,000 so under Morrows leadership Vodafone have managed to lose 3 times that number in six months this year after losing 440,000 in the second half of last year. It probably explains why Morrow and his team are so desperate to talk about 4G speeds which in reality is not even relevant - to nit pick with Telstra over download speeds when they should be looking at improving coverage, 3G, service and so on shows they have lost their way in the past 18 months under Morrow. Big on talk, small on real improvements.
    Wazza11
    • 4G is still important

      they can improve their 3G network to the best 3G network in the country and it's still last generation technology. people need coverage first of course, and that needs to be the #1 priority, but as long as a person gets coverage in their area, they will go where they get the best speeds at the best price.
      theoilman
      • 3G is critical to 4G

        Sorry but you miss the point - 4G does not carry any voice traffic, it is a data only Technology until LTE Advanced comes along so 3G is actually critical for performance and coverage. it is even more critical for Vodafone because the 4G coverage they have right now is poor, so poor in fact that you more likely to have a data session on 3G than on 4G. So 3G is not at all "last generation" technology, it is very current.
        Wazza11
  • Long Term

    Even if they do succeed now, their long term strategy is unclear. They didn't buy any spectrum at the last auction. How are they going to compete when Telstra and Optus do a massive 700/1800/2600 MHz LTE rollout? They can't roam on Optus 3G forever.
    Jazza2
    • Spectrum refarming

      Telstra and Optus have already started their "massive" LTE rollout.

      Voda decided they didn't need to buy any spectrum because they already have enough. I'd say the 20MHz they've allocated is quite a good start.
      Grrrrr-92235
      • Poor mans spectrum

        In reality Voda didn't buy any because the shareholders were not willing to take the risk with the funds. The 20Mhz that Vodafone have is at 1800Mhz which when compared to the 700Mhz is a poor mans solution. The lower the number in regard to the spectrum (700, 850,900 ) the better the coverage, building penetration and performance. All carriers are using 1800 at the moment as 700 was not available, you will see 700Mhz in play next year with Telstra and potentially Optus and from that point on as far as data is concerned Voda are history - in todays terms it would be like a carrier trying to compete with 3G but only having a 2G network ... no amount of slick marketing will overcome that.
        Wazza11
        • They can use 900 for that

          If you have been watching vodafone's weekly network blog posts carefully, you may have noticed 3G 850 going up in many regional locations where previously only 3G 900 existed. This leaves the door open for a future migration of that 3G 900 (which is being shared with 2G) to 4G 900 which is a 4G frequency that several phones on the market already support.

          It will still hurt in some areas where customers go from 20Mbps or more on 4G back to a congested 3G cell where the speed is less than 0.5mbps. In some areas though, they can't do anything about it because the low socioeconomic class in these areas all have low end phones all using 3G.
          jjcoolaus
          • Not enough

            They don't have enough 900Mhz to run 4G. Each of the carriers only has an 8mhz allocation within that spectrum band.
            Wazza11