Vodafone dials up new plans

Vodafone is releasing new mobile plans in an effort to stem the flow of leaving customers and attract new customers.

The mobile phone operator has suffered heavy losses, reporting half a million customers leaving and a $218 million loss in the six months to June 2013. Vodafone – part owned by Hutchison Australia (ASX:HTA) – reported that its customer base had shrunk by 551,000 customers to 6 million in the first six months., taking total losses to more than 1.5 million customers since 2011.

Since mid-2011, Telstra Corporation (ASX:TLS) has seen 2.9 million customers join the giant telco, while Optus – owned by Singapore Telecommunications (ASX:SGT) – increased its base by 433,000.

Negative perceptions of Vodafone’s network appear to be taking a long time to change, after the company suffered major network issues in 2010 and 2011. The company is still reportedly facing a class action by law firm Piper Alderman on behalf of 23,000 disgruntled Vodafone customers.

But analysts predict Vodafone will continue to lose customers, unless it can differentiate itself substantially from other telcos’ offerings. It’s unlikely that customers would move back to Vodafone when they can get similar plans from other telcos.

That may be why Vodafone has relaunched its new Red postpaid mobile plans, with start at $65 a month and offer unlimited calls and text messages, as well as 1.5 gigabytes of downloads. Vodafone Hutchison Australia chief Bill Morrow said the company plans to increase call allowances and change its marketing strategy to become ‘more human’ in an effort to retain customers. Mr Morrow added that Vodafone’s aim was to stop losing customers and start winning them back from early 2014.

Foolish takeaway

Vodafone is up against the gorilla in the room, Telstra, as well as Optus, which is not resting on its laurels either. Both companies will be fighting to keep their customers and stop them going to Vodafone, and we could see a price war on mobile phone plans, which could put more pressure on Vodafone.

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Motley Fool writer/analyst Mike King owns shares in Telstra.

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