Telstra Corporation Ltd (ASX: TLS) is fast gaining an unwanted reputation as having an unreliable network – both mobile and broadband – after another series of outages yesterday and earlier this morning.

It’s the fifth outage the telco giant has experienced in the past 3 months, and came just the day after CEO Andy Penn said the telco ‘had so much more to do’ in how it deals with customers and their issues.

Mr Penn told a business lunch that Telstra had made some significant improvements to its customer service over the past five to six years, but also says that it should have spent time transforming its current processes rather than improving them.

He gave the example of customer service representatives answering the phones quicker now, but ideally, customers would not need to call in the first place.

Telstra customers took to social media to complain, including why there was no information about the outage on Telstra’s own service status page.

 

Many complainers were business customers – with their operations at a standstill until Telstra fixed the issue. The telco has twice offered free data days to all customers as compensation, but business customers might want more than that.

 

The bigger problem is that competitors Optus, TPG Telecom Ltd  (ASX: TPM) and Vodafone – 50% owned by Hutchison Telecommunications (Aus) Ltd (ASX: HTA) are all taking advantage of Telstra’s issues by offering cheap deals and enticing customers away. These outages – if they continue – could lead to long-term brand damage as Vodafone found out in 2010.

As a result, Vodafone lost 2.8 million (37%) of its 7.2 million customers between December 2010 and June 2014, and only saw subscriber numbers begin rising again in December 2014.

Telstra still leads the market with 16.9 million mobile customers from Optus with 9.4 million and Vodafone on 5 million at the end of December 2015.

Foolish takeaway

Telstra will want to work hard to ensure it doesn’t suffer any more network outages for the rest of this year at least – or it is definitely going to have adverse effects on customer numbers and the company’s revenues.

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Motley Fool writer/analyst Mike King owns shares in Telstra Corporation and TPG Telecom. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.