Economy

iPhone 5 exposes gaps in Australian telco market, with Vodafone on back foot

Engel Schmidl /

While customers may be eagerly awaiting the release of the iPhone 5, due in no small part to its 4G connectivity, Australian telcos are fighting a battle over the next-gen network – and Vodafone is losing.

Both Telstra and Optus announced this morning it will sell the 4G iPhone 5 when it launches next Friday, but Vodafone released a similar statement mentioning nothing about Apple’s new handset.

Instead, it reiterated its plans to continue rolling out its 3G+ network – starting from today – and once again confirmed plans to start setting up 4G towers next year.

Ovum research director David Kennedy says Vodafone is on the back foot. But not just in regard to its 4G network.

“The company has admitted it will be losing customers this year, and we don’t expect to see a Vodafone resurgence until the end of 2013.”

In July, Vodafone parent Hutchison Telecoms Australia announced a $131 million loss for the first half of the year, up 68% from last year.

Telstra, on the other hand, delivered a profit increase of 5.4%, and Optus delivered an annual boost of 1.5% back in May.

Vodafone is in a tough situation, after having suffered a harsh few years. Last year it was the subject of intense fury from customers after massive network outages, which caused a significant amount of customer churn. Given the already competitive telco market, rivals welcomed the new members.

Being behind the 4G bandwagon is yet another hurdle. While the company can promise customers their iPhone 5 will pick up faster speeds next year, Kennedy says it’s unlikely the company will offer discounts to keep customers on board.

“I’m not predicting that, because they’re putting all financial resources into building the network and I don’t think they’re financially placed to have a lot of handset subsidisation right now.”

“No doubt, they’re on the back foot.”

However, Kennedy says customers won’t necessarily be worse off on Vodafone, pointing out its new 3G+ network can theoretically reach speeds of up to 42Mbps.

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