Vodafone lost 27,000 customers in September quarter
Vodafone New Zealand lost 27,000 customers in the three months to September 30 according to a footnote in global results released this week.
The telco finished the quarter with 2,484,000 customers. In the previous quarter, it had 2,511,000 (to Telecom's 2,250,000 and 2degrees' estimated 100,000).
It was Vodafone’s first reversal after at least seven straight quarters of customer growth.
Some of Vodafone's customers will have gone to its growing fleet of mobile virtual network operators (MVNOs), who sell a rebadged version of the telco's service. CallPlus, which is easily the largest MVNO, last week told NBR it has signed 1000 customers across CallPlus Mobile and Slingshot Mobile.
2degrees launched on August 14. By one analysts estimate, it now has 100,000 connections - although an unknown number have get a dual Telecom or Vodafone sim card, and being all pre-pay, its number is volatile.
And Telecom, buoyed by XT, had a net gain of 64,000 mobile connections, raising its total to 2,250,000 mark (see table below, courtesty Forsyth Barr).
Vodafone is the most vulnerable of the two big networks to 2degrees, because of its high percentage of prepay customers, and the fact the two telcos' networks share the same 3G frequency - meaning customers don't have to buy a new cellphone to switch.
Read also:
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Telecom promises commercial roll-out of "Turbo" XT by month’s end
Vodafone, Sky TV poised to expand partnership
The overall picture is of a growing market, something the Commerce Commission has confirmed with figures released yesterday, which showed cellphone penetration - thanks to owners of multiple mobile devices - reaching 110% of the population.
As usual, the UK-based Vodafone PLC did not release any half-year financials for its full-owned New Zealand subsidiary, which is part of a quirkily defined “Asia Pacific and Middle East" group (a full-year result is filed; for the year to March 31 2009 Vodafone NZ had its first profit drop in eight years with earnings falling 7.2% to $178 million).
Fewer on pre-pay
By the close of the quarter, 70.8% of Vodafone NZ's customers were on prepay plans. In the year-ago quarter, the percentage was 72.5% (Telecom's prepaid percentage was 60.8%).
The change indicates that customers lost to 2degrees are in the pre-pay segment, which yields less average revenue per month than post-paid contract customers.
Previously, Vodafone NZ chief executive Russell Stanners has told NBR that while his company's average prepay revenue is around $20 a customer, a high number of what he called "glovebox customers" (those who usually only take calls, not make them) meant the median was closer to $10.
Cost cutting drive
Mid week, Vodafone announced that its global half-year profit had increased by 2.4% to £5.9 billion.
The company said its full-year operating profit would be at the upper end of its previously stated £11 billion to £11.8 billion range.
Chief executive Vittorio Colao said Vodafone is now looking to save £2 billion in costs by 2012. The savings will be achieved through smarter use of technology, in part, but that job cuts were "inevitable".
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Comments and questions22
vodafone has finally woke up and found that there is true competition in the market place. What I find hard to comprehen is 2degree ability to charge 44c a minute and at the same time uses vodafone network outside the CBD area. Voda has owned the network for so many years, and they still insist on charging 89c a minute for prepaid?
Voda is now vulnerable because they cannot decide if they are a MVNO supplier or a full pledge customer provider. At the bottom end, they are squeezed by 2degree at the top end, they are squeezed by Telecom.
Given that Voda is using Nokia network and 2degree is using Huawei network, that also mean that Voda infrastructure cost will be much higher.
So Voda, here are my recommedations
a. get your RF planning done properly. Stop complaining about RF interference. Your RF planning sucks. Do a proper cellular coverage exercise.
b. get your act together. Who are you supporting? MVNO or end customers? if 2egree can offer 44c and use your network for outside CBD, why are you charging 89c a minute to end users? Obviously, you are selling less than 44c a minute to 2degree. Dont be greedy.
c. why bother with 900UMTS? where you cannot even get your 900 GSM coverage done properly? And what is your purpose of having 900 and 2100 UMTS where your data charges are so high? You cannot talk faster.
d. Yes, you have good stronghold in Auckland. But for how long? as long as you have 89c a minute in prepaid, you are heading for trouble. Telecom is already launched the first attack with their text to any operator pricing. So what are you doing about it? The days of students carrying 2 to 3 phones are coming to an end.
I do agree that Vodafone (and Telecom and any other business) rip you off if you look close enough. Vodafone has a stranglehold on iPhone pricing too. Vodafone however is the best thing to happen to NZ mobile user. Remember when Telecom charged us $1.49 PER Minute to access our voicemail in 1998? When Vodafone entered the market, they introduced flat 20c voicemail access. Telecom followed suit. And if you like to talk about wholesaler, Telecom as a DSL wholesaler for years, has been charging one level of price, and then another level of price as an ISP. How can it be charging this much, when it can charge other ISP a lower price. The answer is in volume and economies of scale. If you buy bulk, you get a lower price, if you are an insignificant end user, you pay more. Same principle as the warehouse or Kmart.
Many of those customers have gone to wholesale on the Vodafone NZ network [CallPlus, which is easily the largest Vodafone MVNO recently told NBR it now has 1000 customers - CK]
Vodafone were the best operator but moving the call centre to the middle east was a mistake, trying to get ANYTHING resolved is simply impossible. Telecom may be idiots but at least you can speak to someone to put it right.
It was inevitable that Vodafone would lose customers to 2 Degrees in the first 3 months; most of the people I know who've switched were Vodafone customers. The interesting part will happen as we get closer to 2012 and T3G customers have to upgrade or face being switched off (like 025 customers before them). How many of those 2M T3G customers will the 16% more expensive XT network attract?
BTW large drop in Vodafone AU subscribers in Q1 09/10, wonder why?
Why do think they price per min calling so high on prepaid??
Read the article again, and see if you can comprehend their strategy.
Its capitalism, get used to it. How can they be ripping you off when you have a choice?
Dont get a perm, get a clue first.
Dont forget, if the customers move to Voda's MVNO, Voda revenue has dropped significiantly. They use to charge end user 89c a minute, now they only can charge maybe 15c to a MVNO. Do the maths.
This does not count customers who have moved, but didn't keep their Vodafone number. I know a lot of people who have chosen their own 022 number!
As soon as my ridiculously overpriced vodafone blackberry plan ran out I bought an iphone and switched to 2degrees. So far my monthly phone bill has dropped by 63%, and I quite happily run an SME on pre-pay. I would suggest i'm not the only SME doing this so for vodafone to suggest that all their losses to 2degrees are for 'glovebox' users is completely wrong.
because their mobile coverage was awful, their pricing often average and customer service abysmal. Dealing with a zitty faced kid in a vodafone dealership was painful while dealing with someone from a third world country with english as a second language over an echoey phone bordered on torture.
Unless vodafone is gaming the government with these numbewrs to ease regulatory pressure I reckon their prepaid market share will continue to slide
vodafone new zealand one of the most dreadfully arrogant waste of space, useless system and services ever to even attempt to call itself a mobile carrier. fraudsters. pathetic. terrible. dreadful. appalling. horrific. abysmal. a sham and a scam....and they rip you off with what is commonly known as 'carrier call clipping' - that being to add an extra 5 or 10 % duration to your call bills...without you even knowing...
ps. vodafone NZ are useless
moved my pre pay Vodacrone pre pay to 2degrees was paying the Vodafone crooks 89cents a minute mto call another Voda now im on 2D its 22cents and too landline too and the funny bit is im out of the main 2D network so i still roam on Vodafone but pay a 1/4 of what they were ripping me off and even funny yes i did have to pay full price for my iphone but it works fine on 2D piggy backing Voda network
VODAFONE and TELCOM S*&# they are crooks
and then realised how much I was spending on Family each month.
Instead of $20 to Vodafone I gave $400 to Two Degrees for a month's worth of calling.
not happy.
Vodafone might not do a good job of telling me what my plan would have cost wihtout it but Two Degrees doesn't have anything on a par with that kind of offer. $400 is a huge amount for a family to pay each month and so the choice is either not make those calls or go back to Vodafone.
So we moved back.
It is not 2 degrees fault that you failed to do your market research before shifting to 2 degrees. You fail to mention that when using vfone super prepay that it costs 89 cents per minute to call other networks and 44 cents per minute with 2 degrees. You also fail to mention that you can buy a 2 degrees SIM card for $2 but a Vfone prepay pack costs $30. You should also mention that it costs $1 per call when you ring vfone prepay support and it costs nothing when calling 2 degrees support.
because they don't spend anything. Just look at Telecom's average revenue for prepaid last year - it was $10/month.
If those low spend customers move to Two Degrees I'm sure Vodafone will be secretly very happy, rubbing their hands at the thought of having few deadbeats on the network bringing their averages down.
Bet they don't kick up much of a stink about all this.
I'm hardly surprised - as a long-term Vodafone customer I've painfully stayed with the company (only due to such services as those mentioned above) as their customer service has consistently deteriorated. The service is most often appalling - both prepay customer service and plan customer service (also, they now charge prepay customers $1 to contact customer service which seems totally unfair).
If you treat your customers arrogantly, give them shocking service and move profits out of NZ to a greedy multinational parent under the guise of a "dividend" of course people are going to move when a better alternative comes along
As a subsidiary of a multi national company it is understandable if profits get sent overseas. Though vodafone reinvest directly back into NZ infrastructure and to NZ charitable organizations. I am not sure if you are aware but telecom is also majority owned by foreign investors.
" I am not sure if you are aware but telecom is also majority owned by foreign investors."
It's a common misconception that Telecom is a foreign company. This is NOT the case. Telecom is not majority owned by foreign investors and by law foreign investors may not own more than 49.9% of the company.
All of my friends have made the move to 2Degrees. I still have my old XT sim card sitting around but I have not used it for 3 months (don't think I ever will, I ported my Vodafone number to it - I'm prepared to let it die). I have used all three networks and to be honest 2Degrees calling and text charges are fantastic. Other people I know are just waiting for their contract to come up and then they will switch as well. Only a matter of time for Voda-thugs and Tele-scum, I just crack up at their expensive, money wasting ads they are both splashing all over TV... it just makes me think they are trying far too hard to look cool.... Voda with that stupid cell phone orchestra and Telecoms total re-branding... CCAaaaaa-ching ching. Spend it up large fellas! I wont be giving you any of my business.
After 3 years of being overcharged, misinformed, taken advantage of, and pretty much kicked while im down as a customer of Vodafone NZ, Im switching to 2Degrees, even if Vodafone does charge me $400 to close my account, including 2 months account fees which I havnt used. I hope a lot more people switch over too, the coverage on my 2Degrees is better than both Vodafone and Telecom XT where I live, and Ive had $5 on my account for the past week and have only used a couple of dollars, where Vodafone would be charging me $100+ a month to send mainly txts.
Good riddance is all I can say.
After 3 years of being overcharged, misinformed, taken advantage of, and pretty much kicked while im down as a customer of Vodafone NZ, Im switching to 2Degrees, even if Vodafone does charge me $400 to close my account, including 2 months account fees which I havnt used. I hope a lot more people switch over too, the coverage on my 2Degrees is better than both Vodafone and Telecom XT where I live, and Ive had $5 on my account for the past week and have only used a couple of dollars, where Vodafone would be charging me $100+ a month to send mainly txts.
Good riddance is all I can say.