Jim Armitage: Vodafone boss may up sticks soon but will placate punters first

A couple of years ago, when you just couldn’t put up with your rubbish Vodafone signal any more, you’d phone customer service, wait for ages, then have a foreign chappy fail to solve your problem.

So bad was Voda’s customer service that it was fined the thick end of £1 million in October for failing to meet minimum levels. Not only that, but it was hit with a further £4.6 million for failing to credit pay-as-you-go customers after they’d paid to top up.

Little wonder that in the past two years, it was Britain’s most-complained-about mobile operator, with 18 complaints per 100,000 users compared with an industry average of six.

(If you’re shopping around, by the way, Tesco Mobile is popular in our house, and scored highest in the survey by a mile.)

Today, Voda said it was taking great strides to improve this dire record. After an apparent Damascene conversion, it’s hiring customer service staff back in the UK, so you will at least be able to conduct your complaint in English. It’s even encouraging them to pick up the phone, rather than keep you on hold for ages.

All steps in the right direction which, with a bit of luck, may see customers who quit the network return. Voda’s UK division certainly needs something to go right: underlying profit last year fell 16%, stripping out sterling’s impact.

Despite its own goals, Vodafone isn’t alone in finding the UK mobiles market tough. All operators have struggled here in the face of cutthroat competition, and the weak pound makes their kit more expensive. Voda today reported last year’s UK earnings crashed 15.8%. Profit margins fell 3.3 percentage points to 17.5%.

When set against countries like Germany, where underlying profits were up 4.5% and margins up 1.5% to 34%; or Italy (profits up 10.6% and margins by 3% to 36.5%), you have to wonder how long it will be before Vittorio Colao gives up on his company’s birthplace.

My guess is he’ll wait until his new-found love of the customer bears fruit before selling up. John Malone and his Liberty Media group wait patiently in the wings.

All that’s interesting to us Brits, but, with the UK only making up around 6% of Voda’s profit, for shareholders, we’re a sideshow.

More important in today’s numbers were the projections on global cashflow, which has been wobbly to say the least. Given most people own Voda shares for the dividend, that has been a worry.

This year’s divis costing €3.9 billion aren’t quite covered due to the €300 million it spent on buying new spectrum. But Colao says next year will throw off €5 billion in cashflow, covering the divi for the first time in years. Shareholders can breathe a little easier.