VHA hits 6 million mobile customer base, achieves financial growth

Increased scale needed for stronger competition in 5G world

Vodafone Hutchison Australia passed the six million mobile customer mark in 2018 and achieved moderate financial growth amid ongoing aggressive competition from rival Mobile Network Operators and continued significant network and customer investment.

VHA Chief Executive Officer Iñaki Berroeta said the mobile market is as competitive as ever and data inclusions have continued to increase over recent years.

“All Australian customers are getting more data and added value than ever, and that’s because VHA has been driving competition as a price leader with a world-class mobile network,” Mr Berroeta said.

“The price of data per GB has been on a steep decline for several years, decreasing around 85 per cent over the past two and a half years. For example, the price per GB on a competitive MNO $40/$45 SIM Only plan was just under $7 in 2016, today it’s around $1.

“In 2018 alone, we spent around $1.3 billion on our network and technology and pushed the market to do better for customers, introducing our endless data plans and the expansion of $5 Roaming to more than 80 countries.”

Mr Berroeta said the proposed VHA-TPG merger provided the best opportunity to take competition to the next level.

“If we’re going to continue to see consumers benefit from improved technology and better value plans, there needs to be an even stronger third player with the scale to increase investment,” he said.

“With the next generation of mobile network just around the corner, there’s never been a more important time to ensure Australia has effective 5G mobile competition.”

2018 VHA Full Year results (AASB15 accounting change effective 1 January, 2018*):

  • Total mobile customer base grew by 211,000 customers to 6.02 million, a 3.6% increase YoY;
  • Fixed customer base of 33,000 following Vodafone nbnTM full launch in April 2018;
  • Total revenue increased 5.5 per cent YoY to $3,646.9 million#;
  • EBITDA increased 13.4 per cent YoY to $1,102.2 million#;
  • ARPU was $35.52, a decrease of 4.4% YoY from $37.16 (year on year comparison, with 2017 ARPU adjusted for re-classification of Lebara and Kogan^);
  • Leading Net Promoter Score among Mobile Network Operators;
  • VHA loss decreased 30.0% YoY to $124.4 million#.

VHA Acting Chief Financial Officer Sean Crowley said that while VHA’s financial position continues to improve incrementally year on year, it is still a loss-making business due to historical losses from the network and ongoing significant capital and spectrum costs.

“Despite the loss position, we’re proud to continue to invest heavily in our network and great value plans, and it’s especially pleasing that over six million customers are now enjoying the VHA mobile network,” Mr Crowley said.

“In 2018, we added 211,000 customers to our mobile base, with growth driven by increases in postpaid, prepaid and MVNO partner segments.

“We are also pleased to have around 33,000 customers using Vodafone nbnTM and taking advantage of Instant Connect and 4G Backup via the VHA mobile network.”

Mr Crowley said EBITDA growth was pleasing given ARPU pressures due to aggressive competition in the market.

“The increase in customer base has offset the decline in ARPU, therefore contributing to EBITDA growth which was also supported by strong commercial discipline,” he said.

“Revenue growth was mainly driven by an increase in handset revenue and a modest lift in service revenue.”

VHA 2018 Full Year Performance Slides

Iñaki Berroeta

Sean Crowley

 

Notes to editors

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 full year ended 31 December, 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).

#VHA total revenue for the full year ended 31 December, 2018 was $3,646.9 million, a 5.5 per cent increase year on year. This includes an AASB15 negative impact of $45 million which was offset by other accounting estimates of $45 million. VHA EBITDA was $1,102.2 million, a 13.4 per cent increase year on year. This includes a positive AASB15 impact of $15 million and $67 million in other accounting estimates. In a direct year on year comparison, without AASB15 and other accounting estimates, VHA’s total reported EBITDA would have been $1,020.0 million, a 4.9 per cent increase. VHA loss decreased 30.0% YoY to $124.4 million from $177.8 million. In a direct year on year comparison without AASB15, VHA loss would have been $103.4 million, a 41.8% decrease YoY.