Telecom Mobile beats Vodafone

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Jama

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#3383 4-Feb-2005 10:06

From the half year result announced by Theresa Gattung today:

“In mobile we had one of our strongest quarters ever. Mobile achieved 96,000 net new connections in the December 2004 quarter – 22,000 more than Vodafone managed in the same timeframe. Mobile revenues were up significantly, reflecting the momentum that’s been building in the business for some time.

“The launch of our T3G mobile services in November generated huge customer interest in the new range of mobile services that are now available. T3G is now connecting New Zealanders to high speed mobile broadband. Our T3G customers have been enjoying video messaging since December, and Push2Talk is just days away from its launch. Our mobile data revenues grew an outstanding 136% in the second quarter.

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#12492 4-Feb-2005 13:25

But the pendulum will probably swing the other way when Vodafone lauches their 3G later in the year.

Felix

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#12493 4-Feb-2005 15:32

doubt it... expect a lead balloon! though the voda advertising will probably confuse some customers into parting with their money)

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#12504 4-Feb-2005 21:45

To quote the press release

"Cost of sales in the New Zealand mobile unit rose 56 percent to NZ$61 million in the quarter as Telecom spent more to lure subscribers."

Telecom have spent a lot of $$ to gain those new customers by having to offer some serious subsidies on their phones and heavy marketing, the big question is whether they can actually get those customers to spend more to recoup that cost, they have already acknowledged a substancial drop in call minutes because of $10 TXT and while their ARPU increased overall by something like 1% the prepay APRU has actually dropped.

alasta

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#12522 5-Feb-2005 11:49

It stands to reason that $10 text would have had a bigger impact on ARPU in the prepaid segment because the $10 text promotion appears to be particularly popular with teenagers.

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#12528 5-Feb-2005 15:57

Response to alasta's post:
The question is: What will happen when the $10 text is pulled? I know some friends have brought handsets solely for that reason... will we see a mass exodus of teenagers switching back over? - or - will they be happy to stay with Telecom?

I must admit though, increased competition should benefit the customer quite nicely. It will be interesting to see how Vodafones 3g deployment goes as well, and how the customers respond to it. From what I have heard (in China), Telecoms deployment of EVDO went well. Was reading in England the 3gsm deployment has had a few troubles (particularly in-doors).

But time will tell.

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alasta

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#12529 5-Feb-2005 16:30

Good question. I personally believe that they will stick with the status quo and the only reason why they have not yet yelled "guaranteed until the end of 2006" from the rooftops is that they don't want to make a committment to it until later this year.

Of course, they could instead try to hold onto the youth market by using the 3G platform to launch new services that are appealing to that particular demographic, but the great thing about $10 text from a marketing perspective is that Vodafone can't match it because they stand to lose too much revenue.

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#12533 5-Feb-2005 21:46

Look at vodafone figures on a global scale they gained 5.4 million or somewhere around there, and lots of those new customers on Telecom will be $10.00 text customer not business customers. The business customers are the ones that spend money on using services like. Roaming, GPRS, GPRS roaming, much more bucks than some pimple faced 13 year old that has a job at mackers, and I beleive that vodafone could match the $10.00 text Telecoms NZ revenue is a drop in the ocean to a global giant, but congrats to Telecom NZ this will keep vodafone on there toes.

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Felix

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#12565 7-Feb-2005 09:25

mmm.... i think you'll find the $10txt campainge is more about hurting voda and not about gaining market share (though that has been a benefit to Tcom)- I don't think $10txt is about to end anytime soon...

the ARPU for voda's prepay customers is still better than that of Tcom, but it's dropping, and Voda worldwide is struggling... infact if you look at data ARPU, voda is in serious trouble not just here, but everywhere- and they'll be first to tell you that data is the new voice!

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#12573 7-Feb-2005 12:03

The reason APRU has taken a hit in NZ for both Telecom & Vodafone has been the reduced call rates both now have - you get a significant increase in airtime minutes but a reduced APRU. This will take big hit again once the termination rates are cut (assuming they will be) and we will no doubt also see some significant cuts in voice calls this year as well due to the excess voice capacity both networks Telecom have on CDMA and Vodafone with their 3GSM network.

As to voice being the new data what a load of bullocks, voice will always dominate and in reality is the 'killer' app everybody talks about. While there are obviously going to be features such as PTT which will crease data revenue at they end of the day they are still voice apps. I'm not sure where you got your figures about Vodafone data struggling, on a worldwide basis it's still growing well - it's nothing like Voice revenue but is still quite significant. Full details are here anyway in case you have not seen them http://www.vodafone.com/assets/files/en/VOD_KPIs_20041231_1.xls

Felix

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#12574 7-Feb-2005 12:23

Sorry... wasn't clear! Whilst you don't believe data is the new voice (and I won't argue with you here!), most Telco’s (Voda and TNZL included) will argue it is.

PTT, messaging etc are pretty much being given away, in order to attract customers to the respective network, and ARPU across the board reflects this.

I always think the use of the word "bullocks" in a discussion says more about the participant than anything else.

But I do appreciate what your trying to say,

cheers

Jama

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#12575 7-Feb-2005 13:51

There is no such thing as 'voice' any more. Its all data, your voice becomes a series of ones and zeros. PTT especially which is voice over IP - sort of.

Felix

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#12576 7-Feb-2005 14:07

and data integration is the next step! As in integration voice over mobile ip into fixed line ip... the days of "voice" being the "killer app" are gone!!

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#12700 11-Feb-2005 22:14

Interesting respondse from Vodafone..

INTERVIEW: Vodafone To Continue Topping New Zealand Telecom - CFO

WELLINGTON -(Dow Jones)- Vodafone Group PLC. (VOD.LN) expects to keep winning more customers than Telecom Corp. (TEL.NZ) despite coming in second in mobile phone subscriber growth in the last quarter of 2004 for the first time in three years.

Vodafone New Zealand Chief Financial Officer David Sullivan said the planned launch of third generation mobile services around June will help it maintain the market share lead it enjoys over Telecom.

"Wait and see, we are going to compete hard," Sullivan told Dow Jones Newswires in a telephone interview Thursday.

Sullivan was responding to questions on Telecom's sharp performance in the New Zealand mobile phone market in the fourth quarter of last year.

Telecom won a net 96,000 subscribers in the October-December quarter compared with Vodafone's 74,000 customers - the first time in three years that Telecom has topped its U.K. rival in customer growth.

Sullivan said Telecom's growth has come at a huge cost to the New Zealand company, the country's biggest fixed-line phone company.

"We are not about buying share," he said. "Telecom is spending a lot and it's an expensive strategy, but we don't want to replicate their model."

Telecom's cost of sales in the mobile phone business rose sharply in the October-December quarter, jumping 56% to NZ$61 million from NZ$39 million the year-ago period.

Telecom Chief Executive Theresa Gattung has over the past several quarters boosted expenditure in the mobile phone business as she targets 50% of the revenue growth in the sector. In the October-December quarter Telecom said it captured 40% of that growth, up from around 20% in late 2003.

Promises To Outdo Telecom On 3G

Telecom's big mobile push has been aimed at Vodafone, Europe's biggest mobile service operator, which has rapidly grown its share of the New Zealand market since launching in 1998 with a raft of new handsets and services.

The U.K. company topped Telecom in the market share stakes in 2003, and now has just under 56% of the market with the balance held by Telecom.

Sullivan said Vodafone is not "unduly concerned" about Telecom's outperformance in the latest quarter, saying the company had long expected such an outcome.

"It's probably a correction and it's about time Telecom did better than they have done, we are only amazed that we were able to outperform them for so long" he said.

Nonetheless, Sullivan expects Vodafone to continue winning more mobile subscribers than Telecom on an annual basis and to increase its share of the mobile market.

"We would like to continue to outperform by winning more customers, and we think we can do that on a yearly basis," he said.

Sullivan said the company expects to do better than Telecom with its 3G services. "Telecom's a new entrant in 3G, we can do a better job around coverage, service and content," he said.

Telecom started offering its 3G services in New Zealand's major cities in November after investing NZ$40 million in Evolution Data Optimized, or EVDO, technology. The company attributed some of its mobile phone success to services such as caller tunes and music downloads offered via its 3G network.

EVDO is a competing 3G technology to the wideband code division multiple access, or WCDMA, technology that Vodafone is currently building in New Zealand.

Sullivan is promising to deliver a host of 3G services, including video downloads, to compete against Telecom.

"Nothing they have done in the market place has derailed our performance," he said. "We're not complacent, you will see when we come out with the 3G."

By Shri Navaratnam, Dow Jones Newswires; 64-4-471-5990; shri.navaratnam@dowjones.com

-Edited by Marissa Chew

(END) Dow Jones Newswires

Felix

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#12803 15-Feb-2005 09:45

Not very interesting, and not surprising either! Pretty much what I'd expect. It would have been interesting if there was discussion of Voda's rumoured plans to leave the Australasian market within 2 years...

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#12816 15-Feb-2005 16:40

The rumors about Vodafone exiting the oz market have been around for years. While they may have reappeared now you have to question what sort of logic there would be in them now exiting the market after they've now spent a substancial amount over the past 3 years restructuring and signing a 3G deal with Grahame Mahar at the helm. If they had been planning on quitting the market if would have been after Brian Clarke had screwed up the business (and then went on to be shifted sideways to screw up the Japanese market for them as well). Grahame Mahar has completely turned the business around and made it profitable. You could say this is the perfect time to sell the business but to sell something you need a buyer - who would possibly want to buy a GSM network in Australia? Neither Optus or Telstra would be allowed to because the ACCC will not let it happen and with Telecom (AAPT) now owning 20% of Hutchinson 3 and Telstra 50% and Telecom probably unlikely to spend any more money in Australia at the moment they would also be unlikely to be interested. Australia is one of the most competitive mobile environments in the world per head of population with a huge number of networks to choose from. It's unlikely anybody would want to pay what Vodafone would be after - look what happened to SingTel when they paid a heavily inflated price for Optus.

Vodafone aren't just going to walk away from such an investment and they still have the cash cow in Vodafone NZ to keep the spin doctors happy with the Pacific investments.

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