Vodafone CEO promises profitability in the 'near future'

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Vodafone CEO promises profitability in the 'near future'

Fixed-line services are “definitely” in telco's plans.

Vodafone chief executive Iñaki Berroeta has said he expects the carrier to be profitable “in the near future”, as the company continues to struggle to turn around falling customer numbers and profits.

The comments came as the carrier announced it would include unlimited national voice calls and texts as a feature of all its business and consumer plans in a bid to lure customers.

Vodafone is focusing on growing its revenues and customer numbers after declaring a three-year turnaround program - initiated following large-scale network and customer service issues in 2010 - complete last February.

Berroeta said Vodafone was now on track for profitability “in the near future”.

Vodafone Australia lost around $184 million and 45,000 customers in its first half of this year, an increase on the approximately $159 million it lost in the same period of 2014. 

Its customer base also fell from 5.3 million to 5.25 million.

“I don’t want to talk too much about our targets, but our shareholders have invested in this market in the past three years, and the reason why they do that is because they see there is an opportunity to recover that investment,” Berroeta said today.

“And that will happen in the near future, without going into too much detail.

“We are building a business that is stable but our aim is to be an alternative to the current communications services.”

It will need to act quick to catch up with its rivals, however - Optus last week revealed it had added 38,000 postpaid handset customers and 283,000 4G handset customers in the last quarter, while Telstra counted 664,000 new retail mobile customers over the past year.

“What you see in the market over the past year, if you look from the outside, is two things: the first is that Vodafone is doing a lot better, and also the whole market is doing much better," Berroeta said.

"And I think the reason why our competitors are giving more value to customers and are talking about investment is because we’re doing that. So they will react to competition and we will react to competition."

A new line item

In terms of future services, Berroeta fuelled long-standing rumours that the carrier is interested in the fixed-line market.

“The main consideration is around the role that we can play in that development… What is the advantage we are bringing to customers? And that is something we are working on,” Berroeta said.

“Whether it’s through M&A, our own investment or partnerships we have a lot of options even in this market.

“So it’s something that’s definitely is in our plans, but I’m not going to share that now.”

Policy reform

Berroeta also used the talk as an opportunity to take a swipe at Telstra’s universal service obligation subsidy, citing the federal government’s mobile blackspot program as a desirable alternative.

The USO is designed to ensure all Australians can access a standard telephone service regardless of their location. The federal government provides Telstra $253 million each year to carry out the USO.

But Vodafone has taken issue with this arrangement, last month lobbying for a replacement of the USO that would provide funds for non-commercial telecommunications infrastructure.

In June, Vodafone was awarded a contract to build 70 new base stations across New South Wales, Tasmania, Queensland, Western Australia and Victoria under the government's mobile blackspot program.

"[The regional] market is served in a very different way to the five major metro areas,” Berroeta said today.

“When you go to regional sites, the level of the infrastructure is really not at the level of infrastructure you'd expect for a [developed] market like Australia.

“And this has implications for consumers, because they cannot have affordable services, but it goes beyond that and affects business. The companies they are competing with in other countries have services that are much more advanced than what they can get in Australia.”

He cited paying $400 for satellite broadband or waiting a week for services to be fixed as examples of where businesses in rural and regional areas are currently disadvantaged.

“In the last blackspot program, the way the government used the funding was quite smart. And that’s why we decided to participate… It makes sure that not only do we provide services to regional areas, but also some competition," he said.

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