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Vodafone on the comeback trail?

Australia’s third largest mobile phone network operator, Vodafone has announced plans to roll out a super-fast 4G network in capital cities around the country from June, as it attempts to revive its fortunes.

Last year the company, which is partly owned by Hutchison Telecommunications (ASX: HTA), lost over 400,000 customers as it suffered a series of network failures and complaints over lack of mobile coverage.

The new network will have for a time the fastest 4G network in Australia, according to Vodafone’s chief executive Bill Morrow, with the new 20-megahertz spectrum allowing its network to have greater speed than Telstra Corporation’s (ASX: TLS) and Singapore Telecommunications (ASX: SGT) subsidiary, Optus.

Telstra in particular has a significant first mover advantage with its super-fast 4G network, which saw the telco acquire 600,000 new customers in the last six months, while Optus only managed to see 50,000 new customers sign up for mobile services, despite launching its 4G service. That suggests Vodafone will have its work cut out to win customers back from Telstra and Optus, even if it does boast the fastest 4G network for a short period of time, which will allow theoretical download speeds of 150Mbps.

Telstra is expected to regain the lead, as it invests heavily in new digital spectrum and infrastructure to maintain its network supremacy. With the widest coverage in Australia, Optus and Vodafone face a difficult task of reining in Telstra. Telstra has an estimated 1.5 million devices signed up to its 4G service, while Optus is understood to have as many as 500,000.

Yesterday, Vodaphone’s Mr Morrow called for a review into Telstra’s dominance of the mobile and fxed-line telecommunications, as he argued the ‘behemoth’ had the rest of the telco sector at a disadvantage.

Foolish takeaway

Vodafone has an uphill battle on its hands and its competitors, especially Telstra, are not sitting still. Whether the company will be successful, only time will tell.

With its legendary, fully franked 28 cent dividend, Telstra is the darling of Aussie investors. Chances are even if you don’t own Telstra shares directly, your superannuation fund does. But with its share price skyrocketing over the past year, is Telstra past its prime? Click here for our brand-new report: Buy, Sell, or Hold Telstra?

More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King owns shares in Telstra.

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