The 4th quarter earnings reports for Vodafone and Telstra are in (not yet for Optus), and there’s at least a slight correlation between the setbacks of the former and the fortunes of the latter. For the second quarter in a row, heavy customer exodus in Australia led to overall decline for Vodafone worldwide; remarkable considering how small a part Australia plays in Vodafone’s global empire. For Telstra, the news just keeps getting better.
This chipper picture is actually on Vodafone's investor page, suggesting that the graphics department weren't being supervised that day
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Vodafone
Vodafone lost 64,000 customers, a 16% decline from their 400,000 subscriber database. That’s barely an improvement on the 1.5 million lost over the last 2 years since their well publicized network failure, owing largely to the popularity of data munching smartphones. Vodafone’s several billion dollars of investment into building an 850MHz network is nearing completing, just in time for the launch of their 4G network in April! Yay! Telstra, meanwhile, completed its 850MHz rollout several years before Vodafone started theirs, now has as many devices on 4G as Vodafone has customers, and is starting to lease its 850MHz network for wholesale access.
So what? You may say. Vodafone has always marketed itself as a young, hip option in Australia, an annoyance to the big guys. But since being absorbed into Vodafone Global in 2011, Vodafone has major financial muscle behind it – Vodafone PLC (Global) is 20 times the size of Telstra. More to the point, even as their network has been improving, their plans seem to somehow have gotten more expensive overall than the competition. Vodafone is no longer strictly a budget option, with some plans looking poor next to even Telstra’s, and especially next to Optus plans. The main issue is with mobile exclusions, which leads to Bill Shock – an issue most ‘hip young people’ know about and are willing to swap to avoid.
Vodafone continues to see strong growth in the Middle East, but almost all of that growth was swallowed up by Australia’s losses. With Vodafone recently entering into a tower sharing regime with Optus, how long until Vodafone PLC and SingTel (who own Optus) do a deal?
Not that there wouldn’t be more ideal buyers of Vodafone’s assets. With the NBN approaching, all ISPs will need to differentiate themselves somehow, by offering a full suite of mobile and fixed line data options (as well as Pay TV). TPG, Primus and iiNet all seem like likely candidates to pick over the bones of an Australia Vodafone carcass.
At their current rate of loss, Vodafone could fire every employee (they’ve recently cut a third) and still lose money. So something will need to change. Soon.
Telstra
Meanwhile, the Big T posted revenue of $1.6bn, most of that mobile subscribers. These figures cover the full 6 months between June and Dec 2012, so they’re not an exact comparison with Vodafone’s numbers, but even accounting for that the difference is stark. Telstra added an astonishing 607,000 new mobile customers, in a supposedly saturated market.
When it comes to mobile, Telstra is simply doing it right. They’re rolling out towers constantly, making upgrade, hooking more towers up to their fibre network (rather than relying on long-0range microwave relay) and they’re somehow doing that while keeping costs relatively competitive.
Everywhere else, however, Telstra seems unwilling to budge; their recent decision to throttle bit torrent traffic in a Victorian trial is suspected to have more to do with them not wanting to invest in fixed line infrastructure, rather than a real desire to deliver better speeds and reliability to the non-downloading public. Nevertheless, Telstra’s mobile business (including mobile broadband) is pulling away from Optus, and leaving Vodafone back in the starting blocks.
For the bargain hunter, Telstra is still no match for Mobile Virtual Network Operators (MVNOs) using the Optus network. Carriers like Amaysim offer plans that make Telstra’s look obsolete by comparison; a glut of cheap second hand smartphones (either through eBay or as hand-me-downs from techy family members) – is making it possible for people to jump straight into the smartphone world without a costly 24 month contract up front.
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