Nine years and two months after first beginning plans for a third mobile network, 2degrees has launched a pre-pay only option.
Fronting for the company just one week into the job, chief executive Eric Hertz said the 75 per cent of mobile users on prepay are treated like second-class citizens,
with the worst pricing and services.
"So that's where the opportunity is, to bring better value," said Hertz.
The company said it would be upgrading to 3G "in the coming months". Data services for laptops would also be launched over time.
Hertz would not say how much of the market it expects to grab from Vodafone or Telecom.
"This is a new business; we're looking for very rapid growth. The only way we're going to get that is if we get the price right and we're offering the right kind of service."
ABN Amro Craigs analyst Geoff Zame expected Telecom and Vodafone to sit back and cede some lower value prepay customers in the short term but were likely to react if market share hit 3 to 5 per cent.
"If it starts to get some legs then clearly they're going to have to match on price."
With the majority of Telecom's prepay base on the old CDMA network, Zame expects it will be Vodafone which is first to notice a shift of customers to 2degrees because it is easy to simply switch Sim cards.
IDC analyst Rosalie Nelson said there was potential for customers to start using more than one Sim, meaning they would capture a smaller portion of that prepay spending, a lot of which would be calls to other networks, incurring termination fees.
"I think where they're going to have the biggest challenge is a lot of the users have actually structured their communities, and they've structured their patterns of usage around the text bundles or the voice bundles."
She said 2degrees was unlikely to make inroads into the teen market, which uses bundled text deals and Skype calling to keep in touch. But she said the deals would be attractive to a tradesman-type business which needed to make calls to a number of networks and which could grab a valuable "name" number in the 022 range available to 2degrees customers.
Zame said an inbound roaming deal with Australian mobile player Optus would help boost revenue for 2degrees.
Optus holds a third of the Australian market, and with Australian visitors accounting for 70 to 80 per cent of a market valued at between $100 million and $200 million, it could prove to be a valuable revenue stream, Zame said.
2degrees is set to send out 50,000 Sims loaded with $5 in credit as part of its "chinwag" promotion, and Hertz said he expected to see a positive reaction from the market.
"This is really just the start for us. This isn't our whole business plan, it's just the beginning," he said.
The network currently covers Auckland, Wellington, Christchurch and Queenstown - approximately 50 per cent of the population, according to Hertz.
Outside of its coverage areas, customers would "roam" automatically on to Vodafone's network.
See more information the 2degrees website here
