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Vodafone Hutchison Australia loss a result of “mobile termination rate cuts”

Vodafone Hutchison Australia loss a result of “mobile termination rate cuts”

Reports a net loss of $241.8M for the first half of FY17

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VHA chief financial officer, James Marsh

VHA chief financial officer, James Marsh

Vodafone Hutchison Australia (VHA) has reported a net loss of $241.8 million for the 1H FY17, with a total revenue of $3.35 billion.

The loss marks an 8.4 per cent YoY decrease. It reported an EBITDA of $912.2 million, a 12.2 per cent increase from $812.8 million it reported the same time last year.

In comparison, Optus, last week, reported a net profit if $188 million, down $39 million from the same time last year but up marginally by $4 million from the previous quarter.

Telstra reported a profit of $1.8 billion for the six months ending December 2016, representing a 14.4 per cent fall from the prior year’s figures for the same period.

"When looking at our revenue this year, our actual reported revenue declined eight per cent, which was entirely driven by mobile termination rate cuts," VHA chief financial officer, James Marsh, said.

"That impacted our revenue by just over $470 million YoY. When you remove that from the numbers, our revenue increased by 5.7 per cent, and our revenue excluding incoming revenue was $3.2 billion."

Marsh said the results were "pleasing” and followed a “continued focus on long-term, sustainable growth”.

“Significantly, the business turned free cash flow positive for the first time since the merger in 2010, and this has been driven by an increase in EBITDA and sound cash management.

“VHA’s double-digit EBITDA growth, which is a key indicator of the company’s increasingly solid performance, was mainly driven by the uplift in customer base and ARPU complimented by continued cost management,” he said.

Marsh added that the growth in its total customer base, which grew by 125,000 customers to 5.56 million (a 2.3 per cent increase YoY), was driven by the post-paid segment.

“Consumers [are] attracted to our customer-friendly propositions such as $5 Roaming and $0 Roaming to NZ, and Red plan products. Our international roaming products give customers the freedom to use their mobile while overseas, and in 2016 we saw a 42 per cent increase in VHA’s roaming revenue,” he added.

VHA CEO, Iñaki Berroeta
VHA CEO, Iñaki Berroeta

VHA CEO, Iñaki Berroeta, said the results come off the back of a “significant network improvement” that the company embarked on last year.

“Last year, we continued to invest heavily on our network and now we are providing a level of increased performance. It’s a great achievement for the company and it’s something that has helped us to continue our growth,” he said.

Berroeta also said 2016 was a year of debate around the structure of the market, especially since the Productivity Commission recommended scrapping Telstra’s Universal Service Obligation (USO) arrangement with the Federal Government.

The Telecommunications Universal Service Obligation (TUSO) is one of several government policies used to meet universal service objectives nationally.

“There has been a lot of talk is around the amount of different subsidies that have ended up going to the incumbent, creating a significant monopoly in the market and also the consequences that this monopoly is having on the service Australians get today.

“We’re bringing more transparency and fairness around the way that telco services are given to customers,” he added.

He also questioned the need for the investment into the USO, as the government is already investing heavily into the NBN.

“Today, there is a natural monopoly, and that monopoly size is huge. This is a good debate that will ultimately help get a much better market structure where competition will be fairer and we will be able to provide the same quality to all Australians. We’re looking at domestic roaming as a way to share that monopoly infrastructure.”

Berroeta also said VHA was “well-placed for further growth” in 2017 through its continued focus on network, products and customer service, and the launch of fixed broadband services via the NBN.

“To continue growing the business, we’ll keep focusing on the things that are important to our customers.

“That means continued network investment, products that put customers in control and great customer service. And to complement our mobile business, we’re getting ready to launch fixed broadband services later this year,” he mentioned.

The company will also be stepping up preparations for fixed broadband, especially around products and service capabilities, in preparation for 5G services, an connecting more Australians on to the VHA network.


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Tags Vodafone Hutchinson Australia (VHA)mobile termination rateslossTelecommunications

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