Vodafone Australia lost 375,000 customers in the first half of 2011 after customers left the mobile operator because of its poor mobile reception, the Sydney Morning Herald reports.

The operator – which is jointly owned by Hutchinson Telecommunications Australia and UK-based Vodafone PLC – is facing a $96 million downturn in profits with a loss of $78.2 million, compared to a $17.8 million profit a year previous.

Hutchinson attributes its losses to its network coverage and customer service issues, which were predominantly experienced in late 2010 and early this year, the company’s CEO Nigel Dews revealed. This resulted in a 3% decline of customer service revenue to $1 billion – reflecting lower customer numbers and reduced spending by its remaining customers.

Hutchinson and Vodafone have begun to upgrade mobile networks in the country, following widespread faults and customer complaints. The join company intends to build 1000 new mobile sites and upgrade the capacity of a further 4000 mobile base stations.

Despite this, Vodafone may only find out the full extent of the damage to its brand in Australia in the next two years, as customers come to the end of their contracts and begin to look at the company’s rivals.

However, securing rights to new smartphones including Apple’s next-generation iPhone – referred to as the iPhone 5 – could help the company boost its numbers as it begins to rebuild its image.