VHA customer base increases 5.2 per cent to almost 6 million

Financial growth trends continue

Vodafone Hutchison Australia (VHA) has achieved another solid performance in a competitive market with its mobile customer base increasing to almost six million, while continuing to record market-leading positive customer sentiment.

In the six months to 30 June, 2018, VHA continued to strike a good balance between achieving solid growth and offering high quality, competitive services as customer demand for data reaches new highs.

VHA responded to continued increases in data demand by ending excess data charges with its Red Plus plans, and the expansion and enhancement of its Vodafone nbnTM services.

In the twelve months to June 2018, customers used 288 petabytes on the VHA mobile network, up 42 per cent on the previous corresponding period.

 2018 H1 results (AASB15 accounting change effective 1 January, 2018*):

  • Total mobile customer base grew by 294,000 customers to 5.98 million, a 5.2% increase YoY;
  • Total revenue increased 7.1 per cent YoY to $1,768.8 million# ;
  • EBITDA increased 6.8 per cent YoY to $509.7 million#;
  • ARPU was $36.24, a 2.9 per cent decrease in a direct YoY comparison (follows re-classification of Lebara and Kogan^);
  • Leading Net Promoter Score among Mobile Network Operators;
  • Driven by increases in depreciation and amortisation costs following 2017 spectrum licence purchases and accounting changes, VHA loss increased 16.9 per cent YoY to $92.3 million.

Vodafone Chief Executive Officer Iñaki Berroeta said the half year performance built on the company’s long-term, sustainable growth strategy.

“I’m very proud of our track record of reliability, stability and a fantastic customer experience,” Mr Berroeta said.

“We have the highest NPS among the MNOs, our mobile network is world-class, Vodafone nbnTM has launched successfully, and our business continues to grow in a highly competitive market.

“Over the next six months, we’ll continue to evolve our mobile network, including 5G preparations; grow our Vodafone nbn business; and drive further value and product simplification for customers.”

Acting Chief Financial Officer Sean Crowley said the results were pleasing and in line with expectations.

“In a competitive market, VHA has added 294,000 mobile customers year on year, with growth driven by Postpaid and Prepaid segments, including non-Vodafone branded customers,” Mr Crowley said.

“Our Red Plus plans, which remove excess data charges, are already taking a strong share of connections and upgrades. Growth also continues to be driven by our popular $5 Roaming and no lock-in handset plans.”

Mr Crowley said Vodafone nbnTM was performing to expectations following VHA’s fixed broadband market entry in December 2017.

“After a measured launch to ensure the customer experience is right, we have now ramped up distribution and marketing of fixed broadband services,” he said.

“Connections are going well, with customers attracted to the peace of mind offered by VHA’s 4G back-up modem.”

Mr Crowley said global accounting changes*, effective 1 January, 2018 for VHA, affect when access service discount is recognised.

“The new standards don’t impact the amount of revenue collected from customers, just the period in which any access service discounts are booked,” he said.

“Where these discounts occur a greater amount is now recognised earlier in the contract, however, despite this, our revenue and EBITDA continues to trend upwards.”

 

Notes 

Vodafone Hutchison Australia (VHA) is 50:50 joint venture between Vodafone Group Plc and Hutchison Telecommunications (Australia) Limited. Figures relate to VHA performance for the half year ended 30 June, 2018.

^From 1 January 2018, Kogan and Lebara customers were re-classified to Prepaid. Previously, Kogan and Lebara customers were recognised as MVNO customers.

*AASB15 is the Australian equivalent accounting standard of IFRS15, a new global accounting standard that became effective from 1 January, 2018 for VHA. The primary change impacts handset revenue (recognised upfront) and service revenue (recognised over the life of the contract as customers are invoiced). Access fee discounts, which were previously allocated to service revenue, are now proportionately allocated to both handset and service revenue. If a recurring discount is included in a customer’s monthly invoice, the amount of handset revenue recognised upfront decreases and service revenue recognised over the period of the contract increases. Total revenue over a customer’s contract period, of up to 36 months, is unaffected.

#VHA total revenue for the six months to 30 June, 2018 was $1,768.8 million, a 7.1 per cent increase year on year. In a direct year on year comparison, without the AASB15 accounting change, VHA’s total reported revenue would have been $1,792.4 million, an 8.6 per cent increase. VHA EBITDA was $509.7 million, a 6.8 per cent increase year on year. In a direct year on year comparison, without the AASB15 accounting change, VHA’s total reported EBITDA would have been $504.4 million, a 5.6 per cent increase.