Vodafone customer numbers to fall in accounting clean-up

Vodafone's rough ride is set to continue, as accounting changes take their toll on customer numbers.

The network expects large customer losses to continue into the second half of the year because of a change in the way it accounts for customers, which it says gives it the cleanest books among Australian telecom companies.

"[Customer losses] is what you would normally expect," Vodafone Australia chief executive Bill Morrow said. "We're still recovering from a perception issue from a couple of years ago and we're also doing the accounting clean-ups."

He told BusinessDay Vodafone was amending its books to get rid of non-tolling customers - existing customers being given a new SIM card in the hope they would use both, thereby adding "new" customers.

"The reality is many of those, and I'm talking a large number, never really incurred any toll charges whatsoever," Mr Morrow said. "So we just went back and cleaned all of them up and removed those, so those are going to show up in the second-half of the year."

He said the cleaning of Vodafone's customer books would not affect its financial result.

Industry analysts praised Vodafone's decision to get rid of inactive users. BBY telco analyst Mark McDonnell said: "I applaud efforts by carriers to clean up books and give us better reflection on who they really have as current and repeat customers."

He said there was no standard industry definition for a "non-tolling or inactive customer" and "one usage can constitute as active in a month and it is very rubbery".

It is standard practice for the telecoms industry to count each SIM card as a customer, and the total number of customers on their books is larger than the population of Australia.

Mr McDonnell said the number of SIM cards was expected to increase sharply with more people owning multiple devices as well as the spread of machine-to-machine devices such as smart meters.

"That is not going to be a particular meaningful matrix," he said. "A lot of machine to machine will be very low-value transactions."

In the six months to June 30, Vodafone's total customer base fell by 551,000 to 6,028,000. It launched its super-fast 4G network in June and has 800,000 4G devices.

It says it has the fastest 4G speed compared with Telstra and Optus, under independent testing.

Mr Morrow was confident customer numbers would become positive next year.

In recent years, the Vodafone brand has been scarred by the backlash of customers angry over the network's poor coverage, slower speeds and the high drop-out rate, which reached its peak in 2010-11.

This included threats of a class action lawsuit from more than 23,000 customers.

Mr Morrow, praised for his work in Vodafone's operations in Europe and Japan, was recruited in March last year to help revive Australia's No.3 telco.

He said Vodafone had improved its network coverage by 40 per cent, doubled its speeds and its drop-out rates were also down.