Vodafone mobile subs near 6m after including Kogan in numbers

Vodafone has announced a net loss of AU$92 million on revenue of AU$1.8 billion for the first half of 2018.
Written by Corinne Reichert, Contributor

Vodafone Australia has published its first-half financial results for FY18, announcing that it has hit 5.98 million mobile customers after adding 294,000 new subscriptions in the last six months.

However, Vodafone had begun including Kogan Mobile and Lebara customers in its prepaid customer base as of January 1, after previously classifying them as mobile virtual network operator (MVNO) customers.

In the six months to June 30, Vodafone Hutchison Australia clocked a total net loss of AU$92.3 million, which it said was 17 percent higher than the loss recorded for the first half of FY17. The telco partially attributed the loss to its spectrum licence purchases in 2017.

Total revenue grew by 7 percent year on year to AU$1.8 billion for the first half of FY18, while earnings before interest, tax, depreciation, and amortisation (EBITDA) reached AU$510 million, a rise of 7 percent.

A direct year-on-year comparison without the new AASB15 accounting standard taken into account saw revenue increase by 8.6 percent to AU$1.8 billion, and EBITDA increase by 5.6 percent to AU$504 million.

According to the first-half financial results report from Hutchison Telecommunications (Australia) [PDF] (HTAL), Vodafone will spend more than AU$1.3 billion on its network and technology during 2018, including adding over 1,200 new mobile sites, upgrading its mobile network, and continuing its rollout of fibre assets.

"VHA also continues its evolution to 5G, including the rollout of its fibre transmission network, a major project to virtualise its core network, and other technology enhancements," HTAL said.

Vodafone Australia CEO Iñaki Berroeta told ZDNet that while Vodafone will still not announce an official launch date, it should be within months of the other providers.

"We do have plans, of course, on 5G; we have done a number of trials on the technology on many fronts. In terms of disclosing when we will go into to the market, I think that is a bit early, but ... you can anticipate that within plus/minus one or two months, most of the market will be launching 5G similarly I think," he told ZDNet during the financial results call.

"I will not tell you the year, but one thing that I can say is 5G will be available to the customers when the whole ecosystem is ready, and the whole ecosystem means there is significant work on the network that is making sure that the technology is there, but at the same time you also need to look at the roadmap of the devices and the penetration of those devices in the market.

"If you look a little bit into what has been publicly disclosed around availability of 5G devices, we are looking much more at the end of 2019, beginning of 2020."

In regards to the work needing to be done before launching 5G, Berroeta told ZDNet that Vodafone is "really working hard" across its core network and the radio side of things, "because there are different technologies to take potential for 5G, and these technologies can now be implemented".

According to Vodafone, it now has the top net promoter score (NPS) across all mobile network operators, although the reclassification of Kogan and Lebara customers also led to a 2.9 percent decrease in average revenue per user (ARPU), from AU$45.89 per month this time last year down to AU$36.24.

"We have the highest NPS among the MNOs, our mobile network is world-class, Vodafone NBN has launched successfully, and our business continues to grow in a highly competitive market," Berroeta said.

"Over the next six months, we'll continue to evolve our mobile network, including 5G preparations; grow our Vodafone NBN business; and drive further value and product simplification for customers."

While excluded from Tuesday's National Broadband Network (NBN) speed-monitoring report, Vodafone Australia acting CFO Sean Crowley said Vodafone's offerings are "performing to expectations".

"After a measured launch to ensure the customer experience is right, we have now ramped up distribution and marketing of fixed broadband services," Crowley said.

"Connections are going well, with customers attracted to the peace of mind offered by VHA's 4G back-up modem."

Last month, Vodafone dropped its upfront charges for customers switching to NBN services, as well as launching a Wi-Fi booster and rewarding customers that use the telco for fixed and mobile services.

Vodafone in March expanded its NBN services to five more areas, reaching Adelaide, Perth, Brisbane, Tasmania, and the Gold Coast as of April. This marked an almost doubling of its original NBN footprint; Vodafone launched NBN services in December last year across Sydney, Canberra, Melbourne, Geelong, and Newcastle.

During the half, Vodafone kicked off its advanced 4G trials of Frequency Division Duplex (FDD) Massive Multiple Input Multiple Output (Massive MIMO) technology in Parramatta, New South Wales, which is expected to boost network quality and speeds.

Vodafone last week also launched its mobile Pass add-ons that allow for unlimited non-metered use of a selection of sites at 1.5Mbps.

At an additional AU$15 per month cost, users can endlessly stream from Netflix, Amazon Prime, and Stan; for AU$10 each month, users can stream music from Amazon Music, Spotify, Tidal, Deezer, and SoundCloud; endless data from Facebook, Instagram, Twitter, and Pinterst can be purchased for AU$10 a month; while the text elements of Facebook Messenger and WhatsApp, along with text and call parts of Viber, can be used at 1.5Mbps for AU$5 a month.

HTAL also pointed to Vodafone's growth in enterprise, including a deal with Qantas for roaming plans tailored for the airline's pilots, which was announced last week, as well as its narrowband Internet of Things (NB-IoT) network.

For the full year to December 31, Vodafone Australia had reported a 3 percent increase in revenue to AU$3.5 billion, while expenses increased by 1 percent to AU$3.64 billion, resulting in a pre-tax loss of AU$177 million, a 26 percent decrease on the year prior.

EBITDA for the company grew by 6.5 percent year-on-year, moving from AU$912 million to AU$972 million.

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