Vodafone sees customer rebound but still seeking profitability

Vodafone Australia CEO Iñaki Berroeta. Credit: Vodafone

Vodafone could be seeing the beginning of a customer turnaround, with the telco adding customers in the second half of 2014 after several periods of loss, according to financial results released Wednesday by Hutchison Telecommunications Australia Limited (HTAL).

However, HTAL - which owns half of Vodafone Hutchison Australia (VHA) - is not out of the woods yet. VHA’s customer count in 2014 is still down from 2013, and Hutchison reported a $285.5 million loss for the full year of 2014, which was even larger than the $230 million loss reported in 2013.

Total loss for Vodafone Hutchison Australia, combining the losses of Vodafone and Hutchison, was $603.6 million.

VHA added 91,000 customers in H2 2014, ending the period with 5.3 million customers. That was the first increase since 2010, but it was still 46,000 fewer customers than VHA had at the end of 2013. In 2013, VHA also reported a stronger customer trend in the second half of the year -- which includes the Christmas buying season -- compared to the first.

Strong iPhone sales and popularity of Vodafone’s Red plans drove the customer additions, said Hutchison.

In the previous six-month period, ended 30 June 2014, Vodafone lost 137,000 customers and Hutchison reported a $79.5 million loss for the half year.

Hutchison revenue was slightly down in 2014 compared to 2013. VHA had nearly $3.5 million revenue in 2014, down 1.6 per cent from 2013, and $2.7 million in service revenue, down 8.8 per cent from 2013.

"The decline in customer revenue for 2014 reflects customer losses in 2013, but we’re confident we’ve now reversed that and we expect to see customer numbers continue to grow in 2015," said Vodafone CFO James Marsh.

Hutchison chairman, Canning Fok, issued an optimistic statement about the company’s profitability in the future.

“There are very encouraging signs that management’s focus on turning the company towards profitability is working,” he said.

“With the continuing geographic expansion of the network and an increasing retail presence across the country, I am confident VHA is well positioned for growth.”

Marsh said the telco wasn't surprised by the results.

“These results are in line with our expectations for 2014,” he said. “Our performance is steady, and we’re now in a position where we expect the business to grow.”

“Vodafone has invested heavily in its network and customer service in recent years, and the strategy has paid off with successive months of growth.”

Last week, Vodafone CEO Iñaki Berroeta announced that the number-three telco would embark in 2015 on a three-year strategy to grow the business.

The fresh strategy will mark the start of a “new phase” following Vodafone’s turnaround initiative, which sought to restore customer trust after the company haemorrhaged customers in the wake of network problems in 2011, Berroeta said.

At the time, the CEO said Vodafone had met all its targets for 2014 and he was “extremely happy” with the way the company was performing. In addition, he said that Vodafone had increased its net promoter score (NPS), a measure of customer satisfaction, by 16 points over the last year.

He also hinted that Vodafone would soon announce a content partnership with a video provider to complement partnerships announced last year with Spotify and Fairfax.

Vodafone has also stated plans to later this year sell shared family plans, increase 4G speeds with the introduction of carrier aggregation on its network, and roll out Voice over LTE (VoLTE), which is IP voice using the 4G network.

Adam Bender covers telco and enterprise tech issues for Computerworld and is the author of dystopian sci-fi novels We, The Watched and Divided We Fall. Follow him on Twitter: @WatchAdam

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