VHA network struggles result in churn spike for Hutchison

Last year's "operational issues" in VHA's network resulted in a spike in customers churning away from 3 Mobile

Continued struggles in the joint networks of Vodafone Hutchison Australia (VHA) led to increased churn levels away from the operators during the last quarter of 2010, Hutchison Telecommunications Australia (ASX:HTS) has reported in its full year results.

VHA chief executive, Nigel Dews, said churn rates had increased two per cent overall in the 12-month period to 31 December 2010. There was also a considerable spike in churn rates throughout December 2010 and January 2011 as a result of “operational difficulties” in the network.

“They were extraordinary times,” Dews said, commenting on continued difficulties felt by customers on the network over recent months.

Dews would not comment on the exact number of customers who had moved away from the network, however, Dews indicated the company had "ended the year where we started" in terms of customer growth. The network as a whole grew by 681,000 customers throughout 2010, but the vast majority of those - 539,000 customers - joined in the first half of 2010. The carrier attracted just 142,000 new subscribers in the second half.

“The slow down is predominantly in two areas; the largest one is prepaid, we saw continued growth in postpaid,” Dews said.

The carrier this week vowed to fix its network issue within the year, with a complete overhaul of all 2G and 3G base stations planned under a $1 billion network upgrade with Huawei.

“We’ve continued to move positively in a net sense so our customer base has continued to grow, our churn rates are very important to us in that our existing customers have left us during this period and that churn has been a bit higher than last year.”

Dews said continued “operational issues” had some affect on final quarter results for Hutchison Telecommunications' results and would likely flow on to results in the first quarter of 2011 as well.

The company posted a full year profit of $73.4 million for the 12 months to 31 December 2010, based on strong growth in postpaid customers and service revenue for VHA. The result was positive for the company, which last year posted an underlying loss of $119.6 million.

Hutchison Telecommunications' also posted earnings before interest, tax, depreciation and amortisation (EBITDA) of $475.8 million as a result of its VHA shares, a growth of 171.6 per cent for the year. EBITDA as a percentage of service revenue was 21.6 per cent, up from 9.3 per cent in 2009.

The telco's share of VHA revenue also yielded an increase of 18.2 per cent for the 12 month period to $2.41 billion, up from $2.04 billion the year before.

Dews said VHA had a keen interest in taking part in NBN Co’s customer trials in the second half of 2011.

Follow Chloe Herrick on Twitter: @chloe_CW

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Tags VodafoneVodafone Hutchison Australia (VHA)Nigel DewsHutchison Telecommunications Australia

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