Vodafone, owned by Hutchison Telecommunications Australia (ASX: HTA), has finally switched on its 4G services and hopes the move will eventually draw customers away from its bigger rivals.
The switching over of new and existing customers comes almost two years since Telstra (ASX: TLS) first switched on its network, but Vodafone says it will trump Telstra's network because it utilises a greater radio spectrum. Chief network officer Benoit Hanssen said, "put simply, the wider the radio channel, the fatter the pipe, which translates into faster data speeds for customers".
However, Vodafone is already behind the eight-ball when it comes to satisfying customers. Since its network faults in 2010 drove around 1 million customers from the carrier, the numbers continue to fall. According to the Financial Review, some 216,000 customers have left in the past three months alone.
This puts Vodafone at a major disadvantage compared to its direct competitors Telstra and Optus, owned by Singapore Telecommunications (ASX: SGT). Telstra already has over 2 million customers on its 4G network whilst Optus has recently made massive investments for newer, multi-band 4G technology.
Since 2010, Hutchison's (Vodafone) share price has suffered a 62% loss despite having a recent upward trend. It's no surprise that the company has fallen, especially as its rivals are now realising that customer satisfaction is everything.
With little growth prospects in the short term, perhaps Hutchison is better left to traders. SGT, (Optus) has had more success over the past 10 years and has the growth potential of Hutchison plus more. With a market capital of $618 million, only $7 million more than Hutchison, the company still has room to move in both Australian markets and throughout Asia.
Foolish takeaway
Investors should be rewarded for committing their money to long term investments and nearly all stocks (if not all), that have a share price as low as Hutchison's should only take the place of a speculative/high risk investment. Currently, Telstra and Optus will pay you dividends of 5.9% and 4.7% respectively.
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More reading
- 10 of the ASX's best dividend plays
- Stocks with the potential to surprise this reporting season
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- Telstra to axe 170 jobs
Motley Fool contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.
