Vodafone to slow Optus and Telstra gravy train: Ovum

Vodafone to slow Optus and Telstra gravy train: Ovum

Telstra and Optus should watch their backs as Vodafone gains momentum in its comeback, according to the analyst firm.

Telstra and Optus have made a killing off the misfortunes of Vodafone Hutchison Australia (VHA) but the beleaguered telco may be able to put an end to that very soon, according to Ovum.

In 2011, VHA was forced to make a public apology for poor network and customer service. It then pledge to undergo a $1 billion network upgrade but the damage had already been done by then.

Customers flocked away in droves and into the arms of competitors.

About 554,000 customers walked out on VHA in 2011. Meanwhile, its competitors Telstra and Optus reported high new mobile customer numbers. In February, Telstra said it had lured 958,000 new mobile customers onto its network in the first half of its 2012 fiscal year.

On Thursday, Optus announced its fourth quarter financial results and reported it had added 82,000 new postpaid customers in that period alone. This brings the telco’s total mobile customer base to 9.49 million.

While Telstra had strengthened its mobile play in 2011 which contributed to the high customer growth figures as well, Optus was able to keep up thanks to VHA putting itself in the firing line, according to Ovum research director and telco analyst, David Kennedy.

“It won’t be so easy for Optus in the future and it will be interesting to see it does,” he told ARN.

Kennedy noted Optus had recently raised some of its mobile plan prices. “I think it will be able to sustain it because I don’t think Vodafone is looking for a price war,” he said.

VHA’s recovery is going well according to the Ovum analyst as the telco is fairly successful at nabbing new customers.

“Its problem is the 24-month contract customers they burned during the period they were having network problems is leaving in drove – but that is a temporary problem,” Kennedy said. “There is a limited pool of customers and if VHA maintains the momentum it has on new customers it will come back in the market.”

The big question now is whether VHA has the right infrastructure to support customers and investment resources to grow a business in fixed-line.

VHA has indicated it is keen to break into the fixed-line services market by joining the mainland National Broadband Network (NBN) trials last year. If it can work out how to integrate a mobile and fixed-line offering and sell it to customers it will be in a good position to compete with Telstra and Optus.

“Our view of the mobile-only operator in developed markets is it doesn’t have much of a future,” Kennedy said. “They really need an integrated offer.”

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