Vodafone loses 154k more customers


news Ailing mobile telco Vodafone has revealed it lost a further 154,000 customers in the three months to the end of September, with the continued customer churn piling on more financial woes for the company and signalling that the company’s internal transformation under new chief executive Bill Morrow may not yet be having a positive impact.

In the UK-based Vodafone Group’s financial results briefing session this week, Vodafone revealed that its Australian division had lost 77,000 customers in the three months to the end of September. As Vodafone Australia (VHA) is half-owned by the global Vodafone Group, with Hutchison owning the other half, each stakeholder only reports half of the applicable financial results; meaning Vodafone Australia is believed to actually lost 154,000 customers in total in the period.

Elsewhere in Vodafone Group’s financial results, the company said “the continued weakness is brand perception and [mobile termination rate] cuts” in Australia meant that revenue from mobile services declined by 14.8 percent in the period.

Asked about the issues during an investor briefing, Vodafone Group’s chief executive for emerging markets and Australia, Nick Read, highlighted continued improvements the company has been making to its network and customer service capabilities.

“I think what my boss says on a regular basis is: ‘But is it translated into commercial performance and financial performance?’,” he said. “So just focusing on that; if we take call complaints, they’re down by two thirds from the peak. If we take contract postpaid handset churn, it peaked around sort of mid-30%’s. It’s now mid-20%s and improving. Prepaid active base is now stabilising.

“So the really important data point is service revenue quarter over quarter. Quarter 1 we were down -4.5%, but this quarter we’ve stabilised, so we’re virtually flat, quarter over quarter. So what I’d say is, customers are starting to understand that there is a material improvement in the network. We’ve made good advances in the quality, stabilising revenue, improved customer value management is improving our A&R metrics and of course you heard our restructuring. So my view is, next fiscal year, starting to get back into the double-digit EBITDA margins that we expect.”

“Our job is to turn around the operations, so we’re absolutely focused on that,” Read added. “We’ve got a great management team under Bill Morrow. I was down there July, I was down there September. I’m meeting again in November. I think that shows how much time and attention it’s getting.”

Several weeks ago, Morrow announced a number of major initiatives that he said would help get Vodafone Australia back on track; ranging from making up to 500 staff redundant to appointing number of senior executives and re-focusing internal investment priorities.

The company is also progressing its plans to deliver a new 4G network next year (Telstra and Optus have already launched their 4G networks), and has successfully completed t he first test calls on its 4G infrastructure. It has also committed to delivering a substantial increase in network coverage and is “on track” to complete the remaining upgrades of its network infrastructure.

Morrow said the company’s existing restructuring and network investment efforts were starting to pay dividends, with network improvements meaning Vodafone customers could now receive increased download speeds up to 8Mbps on 60 percent of the carrier’s network, 3G data session and call set-up rates improved to meet international Vodafone benchmarks, dropped calls reduced by one third in metropolitan areas, and first call customer care resolution rates improved by almost one third in Vodafone’s call centres.

“Our customers are telling us they’re starting to see a difference, further demonstrated by a 50 per cent reduction in complaints to the Telecommunications Industry Ombudsman and, notably, a reduction in network-related complaints,” asid Morrow. “We are heading in the right direction, but more needs to be done.”

“The network is beginning to improve, the customer benefits are starting to flow and we’re intensifying our network investment as we position for future growth. Our focus is providing a consistently good experience wherever and whenever our customers touch our brand. We know we are not there yet. Only hard work, further investment and an acute focus will deliver what is needed in this market.”

Morrow concluded: “It is vital that we simplify the business to be efficient and to enable growth in the long term. We need to prioritise every dollar and internal action to count toward an improved customer experience and these changes are designed to deliver just this. We continue to face challenges, but I’m excited about the future. We’re committed to building an agile business that can finally give Australians the service they’ve been demanding from this industry for years.”

However, there are also signs that the company is falling further and further behind rivals Telstra and Optus in the market, and that the company’s turnaround effort is not having as much of an impact on customers as it would like.

The company has been suffering financial difficulties for the past several years, stemming primarily from the late 2010/early 2011 series of network outages popularly known as ‘Vodafail’. Vodafone has been consistently investing in its network infrastructure and customer service capability since that time in an effort to redress the problems, but the company continues to lose customers – shedding 178,000 in the first six months of 2012. The company lost a virtually identical number of customers in the second half of 2011, and about 375,000 in the first half of 2011 (although some of those were losses on paper due to changed methods of accounting for customer numbers).

In September — unlike its rivals — Vodafone confirmed it was declining to sell Apple’s popular iPhone 5 handset to new customers, with the carrier turning away those not already on Vodafone plans, in favour of prioritising getting the hyped Apple device to its existing customer base first.

And although Telstra recently revealed it had sold some 820,000 4G devices on its 4G network in the first 12 months of the network’s operation (including over 100,000 iPhone 5 handsets), Vodafone has yet to launch its own 4G network. Optus has also launched its rival 4G network in most Australian capital cities, but appears to be experiencing a slower rate of customer take-up than Telstra at the moment.

Reading between the lines here, it appears as though Vodafone was hit pretty hard over the past quarter by the launch of the iPhone 5. Vodafone has always had a large amount of iPhone customers; the company’s value-oriented packages over the first few years of the iPhone’s life in Australia saw to that. Given the network and customer service improvements it has made over the past year, you would expect the company’s customer churn to be slowing down. But as the iPhone 5 launched, Vodafone’s network churn actually appeared to accelerate. Consider that Vodafone lost some 178,000 customers in the first half of 2012, but then 154,000 alone in the past three months, while at the same time Telstra signed up some 100,000 iPhone 5 customers. If that isn’t the iPhone effect in action, I don’t know what is.

It will be fascinating to see if this acceleration in the churn is seen in the final quarter of 2012 as well. Vodafone executive Nick Read appears to be suggesting that things look better for Vodafone Australia on a month by month basis instead of a quarter by quarter one. For Vodafone Australia’s sake, let’s hope that he’s right.

Image credit: Matt Wakeman, Creative Commons


  1. People only used to stay with Vidaphone because if their coverage even though they were more expensive. Good coverage is a must need for business users… But over the years competitors coverage has improved dramatically so no need to pay the higher rates….

  2. A number of friends are still on vodafone. It’s still terrible. Call’s drop out almost comically to schedule (e.g. about 2 minutes in) and data coverage/speeds are awful. I don’t doubt they’re making fixes, but based on anecdotal (and revenue), feedback they’re not getting much progress.

  3. Understandable as people went to Telstra and Optus for the iPhone 5 as it was an LTE handset… If the iPhone5 was not LTE this wouldn’t have happened. Also Vodafone only offered the iPhone5 to existing customers only.
    Will be interesting to see once Vodafone launch LTE next year what will happen, if they have decent plans at a better price they might claw customers back. I am waiting to see what their LTE offering will be like.

    • They actually dropped by the office and gave us a free iPhone 5 a few days after it was a released, as a thank-you gift for not jumping ship. This is on top of previous things like free ipads, pushing forward the contract renewal 6 months so we could refresh our hardware, and offering us the services of some in-house app developers for free.

      I’m not a big fan of their coverage, but right now vodafone is willing to bend over backwards for business customers.

      • Coverage is one big issue if you move outside of cities/towns. On the flip side that is only in Australia. Telstra and Telecom NZ dominate their home markets but Vodafone seems to have significantly better world coverage. I’ve been to many places where Telstra mobiles either don’t work or are cycled endlessly between third party providers as you move around. But the main nail for Telstra was we found we could save a fortune on our business services with Vodafone.

  4. Wow, turn away a ton of frenzied prospective customers who want to get an iphone 5. And don’t have a network that can provide 4G to the latest phones.

      • Probably not.. but if they had offered it cheaper they could have won some new customers or regained some they had lost previously..

        It’s also likly that they are happy to let the early adpoters of LTE go to Telstra as they will be the ones complaining later that there data bills are high and would put more strain on the Vodaphone network..

        you dont chase customers with low RPU

    • I’d rather have Vodafone, with a stable 2G EDGE network, a rapidly improving 3G network, with 42mbps HSPA+ rollout happening this year across all cities and no 4G than Optus who only has GPRS on 2G, a 7.2mbps 3G network with 14.4mbps “upgrades” at “selected” towers, and 4G that is rolling out a glacial speed.

      Telstra is just to expensive and their 4G is still only available in the very inner city (think max 10kms outside of CBDs) and selected regional locations. That doesn’t help the vast majority of Australians who live more than 10kms from a CBD.

      • I can agree with all of that, except for the Optus 4G rollout speed. That’s pretty damn fast really.

      • I’d agree except I have to LOL at the “42Mbps HSPA+ rollout”. That’s theoretical. Vodafone’s AVERAGE 3G speed for HSDPA (which is theoretically 21Mbps) is 1Mbps. ONE. Does that mean the average on HSPA+ will be 2Mbps?….

        Seriously though, if Vodafone could just stop Fu*%ing around and make their CURRENT network stable, it wouldn’t be such an issue. The issue is and has been for many years, call dropouts, text message delays of hours if not days and minuscule average data rates and dropouts on data too. Even if they could get calls and texts stable, I think many people would be happy to use them as there are many people for whom mobile data isn’t that important.

      • Oh and also, 4G is available to about 45% of the population. Sure, they’re mostly in cities….but that’s the point, most of our population IS in the cities. Telstra are obviously going to cover them first.

        4G in regional areas will likely only come to fruition after the Digital Dividend Auction of 700Mhz is complete next year- that’ll hopefully end up producing a “Next G” style national network, except 4G upgraded from 2013-2016.

  5. For around 15 years I have been with Vodafone and am on the road every day never had any problems with drop outs I some times talk for more than an hour at a time (I am not using an crapple iphone) but since they started upgrading the system the service has gotten worse with my phone and wireless broadband constantly going from 3G to Edge or HSPA and dropping calls occasionally, but with the mobile broadband I use to be able to connect for over an hour and download with out drop outs or having to restart my downloads but that seems to be a thing of the past now the wireless broadband is almost unusable I have to constantly refresh the page to get it load.

    • I don’t mean to be picky but “I am not using a crapple iPhone”. In comparison with other networks, poor call quality/reception has nothing to do with the iPhone. The 2G iPhone was actually pretty bad for calls (I imported one from the States and was using it on Vodafone and the reception and call quality was poor).

      However, iPhone 3G onwards and on Telstra, and especially for the 4S and i5, the reception and call quality has been fine. On my iPhone 4S I can pretty much tell when I’m speaking to someone on Vodafone, everyone else – even Optus – is now fine too.

  6. I was with vodafone since 1999, always found them the cheapest with best value for money, I even beared with them for the last 2 years since the dark network days as I bought into their network fix promise…. but what I feel has been false promise/hope has led me to switch our 2 cell phones to Telstra 2 months ago, yes it is more expensive but hey, the thing works whenever we want it to!

  7. Sorry but you can’t double up vodafone AU’s customer loss (or gain) and say thats what VHA lost.
    Vodafone Group report vodafone AU’s numbers every three months, Hutchison release VHA numbers every 3 months. Voda Group’s numbers are ONLY for vodafone AU whereas Hutchison release all numbers – 3, CJ’s, Vodafone MVNOs and Vodafone AU.

    3/CJ’s/MVNOs could sit steady while Vodafone AU keep losing

  8. I am really surprised that there is anyone left at Vodafone Australia.

    I had been a customer for more than 10 years but the crappy attitude in their service centres, coupled with the poor service provided on-line, incorrect bills (and getting them corrected was just not worth the trouble) eventually became too much.

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