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Vodafone Australia still losing hundreds of thousands of customers Featured
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Vodafone Hutchison Australia (VHA) lost another 390,000 customers last quarter. That’s 4,300 customers a day.

Every twenty seconds, every day, a Vodafone customer in Australia switches to a competitor. VHA had 5.614 million customers in Australia as at 30 June 2013, down from just over 6 million three months earlier, a decline of 390,000 in the quarter. Prepaid customers are 37.3% of the total.

The long-awaited turnaround has not yet happened. The customer losses come on top of a drop of 216,000 in the previous quarter, and 128,000 in the quarter before that. The rate of decline is increasing significantly, not slowing. If it’s a J curve, it’s a great big bold italic capital J. VHA has now lost nearly three million customers in three years.

The data is hidden in the parent companies’ financial statements – Vodafone corporate’s quarterly management statement, and Hutchison Telecommunications Australia’s half yearly report to the ASX, both released on Friday (As you might expect, VHA has not released a statement).

The Hutchison data shows that VHA lost $218.2 million for the half year to 30 June, a drop from $176 million in the same period last year. This represents reduced costs rather than increased revenues. Its share in VHA is by far the biggest component of Hutchison’s operations in Australia (its parent Hutchison Whampoa is based in Hong Kong).

“Our joint venture in Australia experienced an 8.8% fall in service revenue as the business continues to suffer from weakness in brand perception, although network performance has improved significantly in recent months,” said the Vodafone statement. “The anticipated time required for the Group’s Australian joint venture’s brand perception recovery” is listed as one of the factors limiting Vodafone corporate’s ability to predict its future performance.

VHA is certainly trying hard – it has invested heavily in its network over the last two years, recently announcing a major upgrade to its 3G service and introducing “Australia’s fastest” 4G service – a claim it has had to modify after complaints from Telstra.

VHA has problems on another front. The class action planned by law firm Piper Alderman will proceed next month, according to LCM Litigation Fund, which is now funding the action. The suit is believed to have attracted over 10,000 disgruntled Vodafone customers.

Vodafone’s parent companies are showing great patience. They have poured millions into VHA’s infrastructure, and morale within the company has improved greatly with the enhanced network performance.

VHA has said it will take time to turn around, and that most of those leaving are customers whose contracts are expiring. All very well, but the defections are still growing, not declining.

How long can it go on? When will the rate of loss start to decline, and when – if ever – will VHA start increasing its customer base? Telstra and Optus are not exactly standing still. Vodafone has done a lot in recent years – if only it weren’t for those pesky  ‘brand perception’ problems.

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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