The Vodafone debacle has been measured, with 375,000 customers fleeing the network to its rivals within six months and generating losses.Vodafone Australia has experienced a high churn rate of 375,000 customers within a short window of just six months. Customers have abandoned the telco due to its poor network performance, reports the SMH.
Telecommunication analyst Foad Fadaghi believes Vodafone has “a short window of opportunity” to repair its network before more customers defect to rival telcos. Customers disgruntled with the company have voiced their frustrations online, through the renowned Vodafail website.
The company experienced hefty losses of $96 million over the year. $78.2 million of those losses occurred within six months, ending June 30th 2011. The company’s CEO, Nigel Dews, believes the losses are a result of poor customer experiences, a decrease in network quality and the repayment of shareholder loans.
”The decline in Hutchison Telecom’s profit was driven by a $15.6 million decrease in interest income following the repayment of shareholder loans by VHA during 2010, and a decrease in VHA profitability following the network and customer service issues experienced by some customers in late 2010 and early this year,” said Dews.
Hutchison Telecommunications Australia owns 50 per cent of Vodafone Hutchison Australia, with the remainder of the company owned by the UK based Vodafone.
Vodafone tried to cushion customers from fleeing its network with competitive pricing, such as its infinite plans. The plans offer customers an infinite amount of calls to national landlines and mobiles, limiting the excess charges the company can profit from. The plans combined with the company’s struggling network resulted in a 3 per cent dip in Hutchison’s share of customer service revenue.
The average spend of a Vodafone customer each month dropped from $53.48 to $52.87 each. Vodafone believe the drop in customer spending is owed to more aggressive competition, with its parent company Hutchison now expecting to incur a loss for 2011.
Compared to the previous year, the company’s capital expenditure increased from $590 million to $625 million.
At present the company is in the middle of a network upgrade, replacing their out dated towers with brand new Huawei technology. By the end of the year, the company expects to build 1,000 new sites and upgrade a further 4,000 mobile base stations.
“VHA has our full support and we have accelerated investment in the network,” said Chairman Canning Fok said in a statement.
“VHA has moved quickly to fix the network issues and improve its customer service performance and we are confident that this will support VHA’s return to profitable growth.”
According to Fadaghi, the extent of damage sustained to the 3 and Vodafone brands will become evident within the next 12-24 months, as customer’s finish their contracts.
“The customer losses seem to be mostly from prepay non-contracted customers that can easily switch,” he said.
“VHA have a short window of opportunity to make the necessary network improvements to win back the trust of their customers especially as new smartphones such as the iPhone 5 are due before years end.”
