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How to lose 375k customers the Vodafone Hutchinson way

When two companies don't make it right

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In what comes as no shock to industry or consumers, Vodafone has managed to hemorrhage 375,000 Australian customers in the first six months of the year.

Ongoing network coverage issues, poor customer service and a class action from disgruntled customers have pummeled the mobile carrier’s consumer reputation causing the mass exodus.

Hutchison Telecoms, the 50 percent stakeholder in Vodafone Hutchison Australia (VHA) has reported a loss of $AU78.2 million for the first half of 2011 on the back of the Vodafone network fallout. Hutchison's share of VHA service revenue decreased by 3 per cent year-on-year to $AU1.039 billion, and half year operating margin was down 6.6 per cent year-on-year to $AU774 million.

VHA recorded a fractional increase in the postpaid handset and mobile broadband base, although the total customer base declined by 375,000 to 7.2 million customers at 30 June 2011.

HTA chairman Canning Fok said that the struggling merged entity had its full support and has accelerated investment in the network to fix technical concerns and improve its customer service performance. "We are confident that this will support VHA's return to profitable growth," he said.

To support network improvement plans, HTA's share of capital expenditure in the first half of 2011 was $AU162.1 million, 30.6 per cent higher than the corresponding period in 2010. VHA CEO Nigel Dews said "our focus on network and service improvements is having a positive impact on customers and operationally, we have turned the corner".

The carrier claims it is ahead of schedule in the delivery of its network revamp plans announced at the end of 2010. By the end of the year it expects to have built 1,000 sites on Vodafone's new 3G 850MHz network; upgraded 1,330 sites on the existing 2G and 3G networks; replaced equipment at more than 4,000 sites; and added 500 new sites across the country to improve coverage, signal strength and overall network quality.

VHA has also launched initiatives to improve customer service including adding 300 Vodafone customer service and ramping up its social media presence as customer service response. "We learned a lot the hard way in social media and we've responded. It has gone from being an issue and a weakness at that time, to being a real strength," Dews said. ®

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