More customers flee Vodafone amid 'turnaround'

Vodafone Hutchison Australia (VHA) CEO Bill Morrow said he expects customer losses to continue this year after 551,000 customers deserted the number three telco in the first half of this year.

Amid the customer losses, Hutchison—a 50 per cent shareholder in VHA—announced a $95.8 million loss for the half year ending 30 June, 2013. The telco now has 6.03 million customers on its mobile network.

The size of the loss is an improvement compared to the first half of 2012, when the telco bled $131.3 million.

"The turnaround strategy anticipates customer losses to continue for the remainder of 2013 but our underlying churn rate is well within target and our overall average revenue per user (ARPU) is on track," said Morrow.

“Although VHA’s financial results show continued decline, [Hutchison] is confident that the strategic initiatives commenced in 2012 will enable VHA to transform its business,” Hutchison said in a filing with the ASX.

Morrow said, “Vodafone has made significant ground over the past year and a half by essentially replacing our network with the latest technology, thereby increasing the speed and reliability of our network and enabling a fast roll out of 4G.”

“We've also expanded our coverage with 44 percent more network sites at mid-year and plans to reach 72 percent by end of year,” he said.

“This year the company has taken significant steps to provide the level of customer service Australians expect,” he added. “The positive brand metric scores we are seeing from customers who have joined us since the improvements began indicate our strategy is making a difference.”

In the ASX filing, Hutchison said VHA is making progress on its turnaround strategy, the “key focus” of which “is to listen to its customers and deliver the service they expect and deserve.”

The telco has nearly completed integration and consolidation of the business and brands in market, with Crazy John closed in February and the 3 brand to be closed in August, Hutchison said.

Among other turnaround initiatives, VHA has released new data plans and expanded regional coverage by adding 1200 new mobile sites across Australia, it said.

Also, Vodafone has reduced costs by “nearly halving the number of non-customer facing staff and reducing operational expenditures such as high-profile sponsorships to direct investment to network and front-line services,” Hutchison said.

“As a result of these activities, VHA’s brand perception is expected to recover partially in 2013,” it said. “However, the full impact of existing and upcoming changes for customers will not be seen in VHA’s results until next year.”

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Copyright © 2013 IDG Communications, Inc.

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