Struggling Vodafone asks for rent cut

Vodafone is pleading with retail landlords around Australia to cut the rent on its stores as it struggles to contain more than $1.3billion in financial losses.

Vodafone is pleading with retail landlords around Australia to cut the rent on its stores as it struggles to contain more than $1.3billion in financial losses.

It is understood the bid to slash costs has included Vodafone Hutchison Australia abandoning outlets where property owners have refused to negotiate, which a source has blasted as "cowboy behaviour".

The cost-cutting move was announced in a letter sent to landlords last month by its national retail property manager.

"This request is on the back of numerous store closures ... in the past two years due to the significant losses that [have] been incurred from the impact of customers leaving," it said.

"In conjunction with the above customer base loss there have been considerable revenue losses. It is hoped that these rental reductions are a final step in the recovery for 2014 and the near future."

It is understood the letter was sent with the permission of Vodafone's head of property.

But the company has now moved to distance itself from it. "The letter should have been signed off by senior management and wasn't. We will review our processes to avoid this happening again," a spokeswoman said.

Vodafone won't comment on how many outlets have been closed or whether it has stopped operating out of stores where rent reductions are refused.

But one industry source said a Melbourne outlet was closed recently, despite there being several years left on its lease.

"[They] verbally are refusing to pay the rent," the source said. "For an enterprise of the calibre of Vodafone, this is cowboy behaviour considering all the bad press Vodafone has had. They are playing hardball."

The country's third largest mobile provider has been plagued by customer desertions and financial losses after persistent technical and service problems.

About 584,000 customers left Vodafone in the six months to September. The company claims the bulk of the departures were the deletion of inactive accounts.

It follows the company posting a loss of $444.7million in 2011 and $899.3million last year.

The Vodafone spokeswoman said the company was in the first year of a three-year "turnaround" plan. "There are now strong signs that our turnaround is beginning to bear fruit," she said.

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