Optus hopes to stem customer losses with new incentives

Vodafone might copy offer, says analyst Chris Coughlan

Optus will cover the cost of early termination fees (ETFs) and provide credits for old smartphones in a move that appears to be aimed at reversing a recent customer loss trend.

Optus said it will give up to $450 in credit to customers to cover the cost of leaving their existing telco and buying a new phone. Optus will give $200 credit to cover ETFs and up to $250 credit to trade in an old smartphone.

The telco has been losing customers. In its recent financial results, Optus reported 5.38 million customers for the quarter ended 30 June 2014. That was down from 5.42 million in the previous quarter, and 5.51 million one year ago.

While revenue was slightly up in the recent quarter, Optus “will be looking to grow market share to justify the not insignificant investment being made in TD-LTE in the 2.3GHz band and the FD-LTE in the 700MHz band,” said Chris Coughlan, an independent telecom analyst.

Coughlan predicted that the Optus offer might be copied by Vodafone, but not market leader Telstra, who has been taking customers from the other two companies.

“Vodafone may offer something similar, as they too need to stem the decline in mobile customer numbers,” Coughlan told Computerworld Australia.

“Telstra may not react, but push their perceived network superiority. However, they may offer existing customers an upgrade deal if they are concerned that the Optus offer will attract customers away.

“I do not expect that [Telstra] would contemplate paying out exit fees from another carrier. At the end of the day they are continuing to grow in service numbers at the expense of the other two operators.”

Those seeking the $200 credit from Optus must choose a brand new mobile, port their number to Optus and connect to a 24-month My Plan Plus. The credit can be claimed within 21 days of joining and is available to consumers and small and medium-sized businesses.

T-Mobile USA, the number-four carrier in the US, has had a similar offer to cover ETF fees.

The amount of credit for trading in a smartphone at Optus depends on the model and condition of the phone. Customers can estimate the value on the Optus website.

“The offer is well timed, given the September 9 launch of the new iPhone,” noted Coughlan.

“We can expect many current iPhone users will be looking to upgrade and still be under contract, so an offer that will allow these users to upgrade a handset without having to outlay the full retail price for the phone would be welcomed by users.”

Adam Bender covers telco and enterprise tech issues for Computerworld and is the author of dystopian sci-fi novels We, The Watched and Divided We Fall. Follow him on Twitter: @WatchAdam

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

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