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Mobile phone company Vodafone is to offer a complete phone and broadband package for business customers, in what analysts say is an attempt to protect its existing market.
The deal - which begins on Monday - gives business customers the option of taking a discounted Vodafone-branded mobile, landline,
broadband and toll calling package.
British-owned Vodafone has about 55 per cent of the mobile market but only 30 to 40 per cent of those are business customers, said Kursten Shalfoon, Vodafone's general manager of products and services. "We see this as a big growth area for us," he said.
David Kennedy, research director at telecoms and consulting company Ovum, said the bundled deal from Vodafone was not unexpected.
"This is precisely why they went about the ihug acquisition," he said.
Vodafone bought ihug for $41 million last October, saying it would use the internet and phone company to fulfil its ambitions to become a full service telco, offering mobile, toll calls and broadband.
Kennedy said the latest announcement reflected a global trend to look for ways to protect the existing customer base and generate new revenues in developed markets where mobile connection growth has slowed.
Vodafone is hoping to avoid any erosion of its customer base by offering a more integrated telecommunications service, said Kennedy.
However, he said any changes to market share will be gradual.
"I'm not expecting a dramatic shift here because what has happened in a way here is that Vodafone has stepped up to mark that Telecom has already set," he said. "Had Vodafone not done that, then you might have seen some quite dramatic changes in the market."
Forsyth Barr analyst Guy Hallwright said deals like this will put downward pressure on prices but he could not see a huge rush of business customers signing up at the expense of Telecom.
"I've watched a lot of attacks on the incumbent like this in Australia and the incumbent does not need to shake in their shoes."
Hallwright said to a large extent the offer would be a resale of Telecom services which would severely limit the margins available to the company.
While mobile services would be delivered over Vodafone's network, all fixed-line services are provided under a wholesale deal with Telecom.
"Service re-sellers do not really tend to succeed over the long haul. That's why AAPT [Telecom's Australian business] is in such difficulty in Australia," he said.
"If all you're doing is offering back the incumbent's services at a discounted price you make very little margin, or none, or in fact you might even be making a loss on some part of the business."
Hallwright said it was a marketing package based on pricing rather than a technology-based development that could offer completely different pricing.
IDC telecommunications analyst Darian Bird said phone companies wanting to survive over the next few years need to become one-stop telco shops.
"A few ISPs will be able to offer mobile and fixed bundles but Vodafone as the network owner will have more control over pricing and products."
In May last year, Vodafone Group announced an annual loss of US$22 billion ($28 billion), the largest in European corporate history at that time.
The Full Monty
* Vodafone has announced a complete telecommunications package for business customers, including broadband, landline rental, toll calls and mobile phones.
* Vodafone said customers could save up to 60 per cent on calls to Vodafone mobiles and toll calling.
* Signing up to a landline for 12 months will save 20 per cent on line rental.
* Customers will be able to retain their existing phone number.
