Vodafone outgrows rivals
Michael Sainsbury
JULY 26, 2005
THIRD-RANKED mobile phone company Vodafone is set to outgrow its rivals for the second straight quarter, after grabbing 160,000 new customers for the three months to June 30.
Vodafone now has 2.89 million directly connected customers in Australia - 3.2 million including its wholesale customers - as the market pushes past penetration of 90 per cent. Second-placed Optus has 6 million customers.
An increasing number of the company's customers - 71 per cent - are using prepaid services, with more than 15 per cent using popular monthly capped rate calling plans.
"We've had another strong quarter result, adding more than 160,000 net customers for the June 2005 quarter and increasing our customer base by almost 6 per cent," Vodafone Australia managing director Russell Hewitt said.
"There's no doubt that the market is heating up, so we're pleased to have continued our momentum and are tracking better than we expected."
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Macquarie Equities analyst Tim Smart said: "The result was a bit stronger than we thought."
The gains were part of the highest customer growth numbers in five years for Vodafone Group Plc, the world's largest mobile phone company, which added 4.14 million new customers in the quarter to June 30. That is the most since the first three months of 2000 and beat analysts' expectations of 2.83 million users.
Armed with slick advertising and the market's widest range of discount plans, in the first three months of the year Vodafone added 200,000 new users -- more than the two biggest players, Telstra and Optus, combined. Despite booming customer numbers, Mr Hewitt will be happy to hold revenues and profits steady for the group's financial year, which ends on March 31.
In its latest results, Vodafone's revenues only rose 7 per cent, despite increasing subscriber numbers.
In the June quarter, Vodafone's average revenues per user - the industry benchmark for the value of a customer base - continued to fall. Prepaid users spent, on average, $320 a year with the company, down from $326. The diminishing number of Vodafone's contract users spent an average of $1054 annually, up from $1005 in the previous year.
But the company saw its profit margins fall by 10 per cent last financial year.
This underscores the revenue slowdown in the Australian mobile market, caused by increasingly widespread discounting.
Mr Smart said: "All their growth is in prepaid, so you have to temper the enthusiasm to see how sticky that base is in a couple of quarters."
Vodafone Australia has just started a commercial trial of third-generation handsets.
The Australian
AI
