diff --git a/terraform/modules/vsphere-vm/files/default-cloud-config.yml.tftpl b/terraform/modules/vsphere-vm/files/default-cloud-config.yml.tftpl
index 95afe6f..05a17af 100644
--- a/terraform/modules/vsphere-vm/files/default-cloud-config.yml.tftpl
+++ b/terraform/modules/vsphere-vm/files/default-cloud-config.yml.tftpl
@@ -1,6 +1,8 @@
 #cloud-config
 
+hostname: ${hostname}
 fqdn: ${fqdn}
+prefer_fqdn_over_hostname: true
 
 ssh_pwauth: false
 
diff --git a/terraform/modules/vsphere-vm/version b/terraform/modules/vsphere-vm/version
index 7bcd0e3..6812f81 100644
--- a/terraform/modules/vsphere-vm/version
+++ b/terraform/modules/vsphere-vm/version
@@ -1 +1 @@
-0.0.2
\ No newline at end of file
+0.0.3
\ No newline at end of file
diff --git a/terraform/modules/vsphere-vm/vm.tf b/terraform/modules/vsphere-vm/vm.tf
index 430e590..2ffbcac 100644
--- a/terraform/modules/vsphere-vm/vm.tf
+++ b/terraform/modules/vsphere-vm/vm.tf
@@ -6,12 +6,15 @@ resource "random_password" "vm_root_user" {
 }
 
 locals {
+  hostname = split(".", var.fqdn)[0]
+
   # Fallback to a random generated password if the user didn't provide one
   root_password = coalesce(var.root_password, random_password.vm_root_user.result)
 
   # User data rendered using the Terraform provider produce an invalid configuration
   # See https://github.com/hashicorp/terraform-provider-cloudinit/issues/165
   default_user_data = templatefile("${path.module}/files/default-cloud-config.yml.tftpl", {
+    hostname: local.hostname
     fqdn : var.fqdn
     root_password : local.root_password
     authorized_key : var.vm_authorized_key