Vodafone loses AU$10m in EBITDA due to ACCC decision

The ACCC's decision to slash wholesale call pricing cost Vodafone Australia AU$10 million in EBITDA and AU$230 million in revenue over the last six months.

Vodafone Hutchison Australia (VHA) 50 percent owner Hutchison Telecoms has reported the telco had earnings before interest, tax, depreciation, and amortisation (EBITDA) of AU$412 million for the first six months of the financial year -- a 7.7 percent increase from the AU$382.4 million reported for FY15, but AU$10 million less than expected off the back of the decision made by the regulator to slash wholesale pricing for calls.

The telecommunications carrier also recorded a net loss of AU$163.7 million, while total revenue for the half-year stood at AU$1.6 billion, a 9.7 percent year-on-year decrease from last year's AU$1.77 billion. Revenue would have increased by 4.5 percent, or AU$230 million over the half, were it not for the Australian Competition and Consumer Commission (ACCC) decision, Hutchison said.

The ACCC in October last year made the decision to cut the price telcos can charge each other and fixed-line network operators for calls by more than half, from 3.6 cents per minute down to 1.7 cents. Telstra has flagged that the ACCC determination will also affect its FY16 revenue.

Net average revenue per user (ARPU) for Vodafone was AU$41.72, a decline of AU$3.83 from last year's AU$45.55, while gross ARPU, which takes into account handset repayments on post-paid plans, decreased by slightly less -- from AU$51.32 down to AU$49.11.

Vodafone reported a total network customer base of 5.494 million, up 4.5 percent from the 5.255 million reported last year: Post-paid customers totalled 3.307 million, up by 4.2 percent or 132,000 customers; prepaid customers numbered 1.679 million, down by 0.4 percent or 6,000 customers; and MVNO customers reached 508,000, up by 28.6 percent or 113,000 customers, the last of which VHA attributed to TPG customers moving from Optus' network to Vodafone's.

VHA CFO James Marsh said that Vodafone saw a 62 percent year on year increase in data growth, as well as strong uptake of its AU$5 global roaming plans, which in turn improved revenue despite Vodafone's decision at the start of the year to dump roaming fees for customers travelling to New Zealand.

"VHA's Red plans continue to be popular, with products such as AU$5 Roaming and our AU$0 roaming trial in New Zealand a driver of new connections, renewals, and upgrades," Marsh said.

The CFO also attributed Vodafone's financial success to the reliability of the network, which it is affirming with a 30-day money-back network satisfaction guarantee, as well as its recent investment in its core network.

Vodafone's 4G network covers 95.3 percent of the Australian population, or 23 million people -- a 40 percent rise in its network size over the past four years -- with the telco in May announcing that it will spend AU$9 million on constructing 32 new mobile base stations in regional areas.

It also purchased AU$68 million worth of 1800MHz spectrum earlier this year; refarmed its 850MHz spectrum band to bring coverage to regional and metropolitan Queensland, New South Wales, and the Australian Capital Territory; and proposed to the Australian government that it be permitted to pay AU$594.3 million for 2x 10MHz in the 700MHz spectrum band that was unsold in the 2013 auction.

The telco's participation in the Australian government's mobile blackspots program has also seen it build 70 base stations as part of round one, with plans to take parts in the second and third rounds.

The Australian Telecommunications Industry Ombudsman (TIO) revealed on Thursday that consumer complaints about VHA have again decreased, down by 39.68 percent year on year, from 6.3 new complaints per 10,000 services in operation to just 3.8, although up slightly from the 3.7 reported last quarter.

"We're very proud of our fast, reliable network, worry-free products, and high standard of customer service, so it's pleasing to see Vodafone again has the lowest level of complaints to the Telecommunications Industry Ombudsman of the network operators. This is the fourth quarter in a row," a Vodafone spokesperson said in a statement on Thursday.

"Over recent years, Vodafone has achieved an extraordinary turnaround. This transformation is reflected in a number of industry benchmarks, including Vodafone's status as the least complained about mobile telco for the past 12 months.

"Our ratio of 3.8 complaints per 10,000 services in operation for the June 2016 quarter is 40 percent lower than the industry average, and represents a 73 percent reduction on the same quarter in 2014."

In terms of mobile market share, analyst firm Kantar reported VHA as being down by 0.5 percentage points to hold 15.2 percent total mobile market share; down by 1.2 percentage points to hold 14.2 percent of the prepaid sector; up by 0.6 percentage points to hold 17.1 percent of the post-paid market; and down by 1.6 to hold 10.4 percent of the no-contract segment.

Updated at 10.30am AEST, August 1: This article incorrectly stated that VHA's loss was AU$137.2, when it was actually AU$163.7 million due to joint venture accounting adjustments.