5/21/2009 11:56:00 AM
Vodafone turns to prepay amid losses
Vodafone is looking to the prepay market in a bid to bolster its customer base and boost revenue after a set of weak Q1 2009 results.
It has left Vodafone UK falling further behind O2 and in desperate need of a recovery in the second half of the year.
The network lost 450,000 customers during the first quarter from a total of 19.1 million in Q4 2008, as profits fell 45% to £255m from £431m in Q1 2008.
Meanwhile, Vodafone pulled in 2% less revenue in the quarter to £5.3bn, compared with £5.4bn in Q1 2008. It now has a UK customer base of 18.7 million; trailing behind market leader O2’s 20.8 million.
The network has launched a new prepay offering, ‘freedom packs’, and has placed heavy discounts on prepay handsets, with a large scale marketing campaign on billboards, TV and online.
It appears to be among the first major moves in the consumer segment under new UK CEO Guy Laurence, who is believed to have identified the prepay market as one neglected by rival operators.
A Vodafone spokeswoman said: ‘This is about retention and attraction so we will be speaking to both our existing customers and new customers – for us, the prepay market represents an important way to grow revenue.’
Freedom packs offer the customer an allocation of minutes and texts with the purchase of a £10, £15, or £20 deal that lasts 30 days.
Prepay customers account for around one quarter of the operator’s income.
Vodafone, O2 and T-Mobile are currently the top three networks fighting for share in the prepay market.
Despite the low ARPU reputation of the prepay segment, many believe aggressive deals could act as an important catalyst for Vodafone to be a first step for teenage, first-time mobile customers.
One analyst said: ‘There is not a lot of competition in the prepay market, but price wars come in waves, other operators could follow suit depending on how well Vodafone does.’