Vodafone gears up to launch first wave of 5G sites

Telco’s mobile customers, revenue declined in 2019 amid uncertainty

VHA CEO Inaki Berroeta
VHA

Vodafone Hutchison Australia (VHA) — a 50-50 joint venture between Vodafone and Hutchison Telecommunications Australia (HTA) — says that the uncertain environment it faced last year meant it had focused on maintaining rather than growing its customer base in 2019.

The telco today revealed that revenue declined 2.8 per cent year on year to $3.52 billion, with earnings before interest, taxes, depreciation and amortization (EBITDA) growing 6.9 per cent to $1.18 billion.

The EBITDA figure includes a positive impact of $142 million from the shift to the AASB16 accounting standard, which took effect at the start of 2019 for VHA.

Taking that change out of the equation and adjusting 2018 EBITDA for previously reported one-off positive benefits of $67 million, VHA has seen stable EBITDA year over year, acting chief financial officer, Sean Crowley, told a results briefing.

VHA said that it incurred a net loss for the 12 months to 31 December of $279.3 million, representing a 124.5 per cent increase from its 2018 loss of $124.4 million.

The total number of customers on VHA’s network declined from 4.6 per cent to 5.74 million. That included a 4 per cent decrease in the telco’s direct prepaid and postpaid customers of 229,000.

The drop in customers in the prepaid segment was particular steep at 8.4 per cent. VHA said that in Q4 it “removed” 94,000 prepaid customers who were not generating revenue, and had made a decision to not target prepaid channels that were marginally profitable or unprofitable.

The company also revealed it had seen a drop in the average monthly revenue per user of 4.9 per cent to $33.35.

VHA’s relatively small NBN customer base grew steeply to 114,000 in 2019, representing a 245.5 per cent year on year increase; the telco only entered the fixed-line broadband market in 2018.

Crowley said that the telco hadn’t pursued aggressive customer growth in 2019. A defining feature of the year for VHA was the court case it waged against the Australian Competition and Consumer Commission, after the ACCC said it was opposed to VHA and TPG tying the knot.

Earlier this month the Federal Court came down on the side of the two telcos, with a ruling that removed the key barrier to the pair pursuing a merger. The companies are still required to obtain regulatory sign-off and shareholder approval.

The court decision “brings a lot of clarity” around spectrum and infrastructure availability for the telco, VHA chief executive Iñaki Berroeta told the briefing, with the CEO saying that VHA had pursued a “conservative approach” in 2019.

5G rollout

The telco said the launch of its first 5G site was imminent, with a test site in Parramatta to be the first of its commercial sites based on the new standard.

The federal government’s bar on the use of Huawei gear for 5G was another regulatory hurdle that VHA had to address in 2019, with the ban meaning the telco was forced to find a new vendor for the radio access network component of its 5G rollout.

VHA has commissioned more than 650 5G sites from its partner Nokia to be delivered in 2020, with that number expected to grow to thousands over the coming years. Berroeta expects the merger with TPG to accelerate the rollout.

TPG installed a number of small cells in metro areas in preparation for becoming Australia’s fourth mobile network operator (MNO), before ditching the plan, and has an extensive fibre network (which in some cases serves existing VHA mobile sites). In addition it holds a significant amount of mobile spectrum both in its own right and through an already existing joint venture with VHA.

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