Vodafone falls prey to stiff mobile competition

Vodafone New Zealand's customer numbers have dropped to their lowest since December 2008, as the country's biggest mobile phone operator deals with mounting competition from rival Telecom's XT network and new entrant 2degrees.

Auckland-based Vodafone had 2.434 million customers as at September 30, down from 2.458 million at the end of June, according to a quarterly statement from its London Stock Exchange-listed parent.

The phone company shed 24,000 customers in the quarter, adding to the 26,000 lost in the previous quarter.

Vodafone has been losing customers almost every quarter from a peak of 2.511 million New Zealand customers in September 2009, though it's kept the biggest market share at about 47.6 per cent.

Rival Telecom also shed customers in its latest reported period, with total mobile customers at 2.097 million at the end of June, down from 2.192 million three months earlier.

But Telecom has been gaining ground with its XT network, adding 173,000 customers to 1.183 million, meaning that most of the loss has been migration from its obsolete CDMA network.

At the same time, 2degrees has grabbed about 11 per cent of the market, its latest update in March showing it had some 580,000 customers.

Vodafone continued to shift more customers on to monthly payment plans, the percentage of traditionally lower value pre-paid contracts down to 67.2 per cent.

Last month, Vodafone's New Zealand subsidiary reported annual profit of $151.5 million in the year ended March 31, up from $121.6 million a year earlier. The bulk of the gain came from a cheaper depreciation and amortisation bill.

The company expects its earnings for 2012 to decrease by $55 million after a Commerce Commission ruling imposed a reduction in mobile termination rates - the amount operators charge each other to end a call on a rival network.