Vodafone today revealed its total customer base declined by 375,000 over the past six months, with the besieged mobile telco still struggling to shake off poor customer sentiment stemming from its disastrous series of network outages in late 2010 and earlier this year, and a rash of re-classified customer numbers also taking their toll.
Speaking in a teleconference held today associated with the financial results of its part-owner Hutchison Telecommunications Australia (HTA), Vodafone (VHA) chief executive Nigel Dews said the past six months had been “challenging”.
Most of the decline in customer numbers had come from a sharp drop of 347,000 prepaid customers over the period, he said, with Vodafone’s underlying post-paid (plan) customers remaining unchanged. However, some of the numbers are not directly comparable, as Vodafone changed the way it accounted for certain types of customers in the quarter — for example, prepaid customers — to focus on how many are truly active.
“The net decline in total customer base includes adjustments contributing 110,000 to the overall decline, which were due to reporting improvements. This comprised a 32,000 reduction in the post-paid base and 78,000 reduction in the prepaid base,” said Dews.
The news confirms a report last week by the Financial Review which stated the telco could have lost as many of 378,000 customers in the six months to the end of June. The telco now has about 7.2 million customers in total — with about 61.4 percent of Vodafone’s own customers on post-paid plans (excluding customers of other mobile telcos which resell Vodafone’s services).
The loss in customers also played out in the company’s financial results, with HTA’s 50 percent share of Vodafone’s finances delivering it a loss of $78.2 million in the first half of 2011, compared with a profit of $17.9 million in the same period in 2010. This means Vodafone’s loss as a whole for the period would be expected to be about $156.4 million for the period.
Some of that decline in profitability was driven by a $15.6 million decrease in interest income — but Vodafone today acknowledged most of it was due to its network and customer service issues experienced late last year and early this year.
Turning Vodafone around
To address its issues, Vodafone has embarked on a series of rolling network improvements, deploying new hardware using the 850MHz spectrum band also used by Telstra, as well as replacing a large number of other sites with new radio equipment from Chinese vendor Huawei.
Today, Dews said more than half of the 3G 850MHz rollout was now complete, with 788 new sites added to Vodafone’s network, and a total of 1,000 new 850MHz sites slated to be built by the end of the year. 815 sites have been upgraded in general on the existing 2G and 3G networks, while a further 515 sites will have been upgraded by the end of the year, and 500 more built.
The Huawei radio replacement has kicked off in Canberra, Perth, Northern NSW and Tasmania, after it was tested in the Newcastle/Hunter and Central Coast regions north of Sydney. The Huawei rollout will be completed during 2012, and there are also other core network and transmission upgraded underway.
The company has also invested heavily in customer service, adding more than 300 customer service staff and introducing 24×7 support, as well as a number of other measures. As a result, complaints to the Telecommunications Industry Ombudsman had been “trending downward”, Dews said, with total TIO complaints falling 36 percent between the first and second quarters of the year.
The integration of the Vodafone and HTA systems is more than half-way done, following the pair’s merger to form VHA (which primarily trades using the Vodafone brand), and the retail store consolidation is now “largely completed”, according to Dews. The telco is two thirds of the way through its program to refit and upgrade the Vodafone retail stores.
Despite all the improvements, Vodafone still expects to make a loss in its full year results, which will be announced in January 2012. However, it expects to improve its profitability in the second half of this year, and Dews was up-beat about the telco’s outlook when asked about the issue of re-establishing trust.
“I think we’re well on our way to doing that,” he told media and analysts. He noted Vodafone had to respond responsibly to customers, have “no surprises” in its service delivery and “delight” customers with its offerings. “I think we’re well on our way to achieving that,” he said.