KEY POINTS:
Vodafone suggests its British parent might scale back its investment in New Zealand as the amount of revenue it earns from each customer declines.
Announcing its latest results yesterday, Vodafone said it signed on 89,000 new customers in the December quarter, traditionally the busiest of the year, up
from 68,000 net new customers in the same three months the year before.
The improved numbers were due to the success of its BestMate service launched in November, which allows customers access to unlimited voice, text and video calling to a nominated Vodafone number for $6 a month.
"We are continually trying to launch new services and last quarter we didn't launch anything fundamental in to the marketplace, but this quarter we have launched two big propositions," said chief financial officer James Marsh.
But in a worrying sign, it is earning less revenue from its customers.
Vodafone's monthly average revenue per user (ARPU) was $50.70, down from $51.20 for the same period the year before.
Marsh said the flat ARPU was "absolutely" a concern for the New Zealand mobile company because it was being compared to Vodafone's operations in other countries.
"We are part of the portfolio of businesses and much of our investment is very much decided on the return that the group as a whole will generate."
Vodafone Group was a supportive shareholder which continually provided funds but "clearly we are keen to provide ... returns on that investment".
Vodafone NZ invested "huge sums" into the New Zealand economy in new infrastructure, said Marsh. The company has previously refused to disclose how much it has invested in the local market.
He said the company's flat ARPU was due to the unresolved issue of mobile termination rates and increased competitive pressures from Telecom and other players.
Marsh urged the Government to come to a decision immediately about mobile termination rates - the wholesale fees Vodafone charges Telecom for calls made from Telecom landlines - which he said had wiped millions off its bottom line.
Telecom has still failed to reduce prices for calls from fixed lines to cellphones despite an agreement that saw Vodafone provide a discount on its mobile termination rates from 26c a minute to 20c a minute.
Vodafone's ARPU decline was also due to it offering better value plans in an increasingly competitive market.
The company said it was encouraged that it picked up 89,000 more customers driven by its BestMate service. Total voice minute useage over the quarter went up to 672 million from 616 million the year before.
"We would hope to see with useage increasing that people are using Vodafone more and taking advantage of the new plans," said Marsh.
Competing against the BestMate offer is Telecom's Boost Monster Plan, which offers 1000 texts for $10 and has signed up 200,000 customers.
Vodafone has said that teenagers who currently use both a Telecom and Vodafone cellphone to take advantage of different deals from each carrier would switch to using its phone exclusively because of BestMate.
Vodafone was hopeful that it had beaten Telecom in market share this quarter due to the new plans it had introduced, but would not know until it saw its rival's second-quarter results due out today.
Telecom's net profit for the quarter is forecast to be $204 million, according to the median estimate of 13 analysts surveyed by Bloomberg News. In the same quarter last year it made a $665 million loss after writing down the value of its Australian business AAPT.
