Vodafone stretches lead on Telecom

By PETER GRIFFIN

Vodafone has fended off accusations that New Zealanders face bigger cellphone bills than their counterparts in other countries, as a jump in customer numbers shows it now has 53 per cent of the mobile subscriber market.

Vodafone signed up 140,000 customers in the six months to September and claims a substantial number of converts from rival Telecom's ageing 025 network. Most of those new additions are prepay customers, topping up on credits as and when they like.

Vodafone managing director Tim Miles said the small size of the market meant many of those customers must have jumped networks.

"I'm sure what's happening is churn off 025," he said.

Telecom's accounts revealed last month that it was spending more chasing subscribers. It transferred 87,000 customers to its more advanced 027 service in the three months to September, but overall has increased its customer base by about 2 per cent in the last year.

Telecom now has 1.27 million subscribers against Vodafone's 1.43 million.

"We are hell-bent on retaining half of this market and we will do whatever it takes, including sacrificing bottom line," said Simon Moutter, Telecom chief operating officer.

"We want 50 per cent of the growth in this market."

Vodafone New Zealand did not break out its earnings for the period (it made a $90 million profit in the year to March), but operations in the Asia Pacific region, including New Zealand, Australia, Fiji and a stake in China Mobile, generated £488 million ($1.3 billion) in revenue and a £64 million profit.

Despite a 58 per cent surge in mobile data use by Vodafone customers signing up to new services such as the interactive portal Vodafone Live and the business-oriented Mobile Connect, average revenue per subscriber rose just 1 per cent to $655 a year.

Miles said low-value prepay customers dragged the figure down, but competitive pricing had also slowed revenue growth.

"Usage has gone up but rates are getting more competitive," he said.

Despite a proliferation of competitive mobile deals, the Telecommunications Users' Association claims New Zealanders, particularly medium- and high-use subscribers, still pay too much.

In particular, the association has criticised pricing for calls made from a landline to a mobile.

For those calls, the fixed-line operator pays the cellphone provider a negotiated "interconnection" charge - about 30c a minute.

While that figure has dropped from about 50c in the last few years, Vodafone claims Telecom and TelstraClear are not passing on the savings to customers.

Telecom spokesman John Goulter said Vodafone's claim was untrue.

"The average price of fixed-to-mobile calls has decreased markedly," he said, citing prices of 47.5c a minute in 2000 and 43.7c this year.


Parent company posts smaller first-half loss

Vodafone Group, the world's biggest mobile-phone company, posted a narrower first-half loss as more customers signed up for cellular services.

The net loss shrank to £4.25 billion ($11.4 billion) for the six months to September 30, from £4.34 billion a year earlier, as Vodafone cut costs and won customers.

It was the seventh straight loss tied to US$260 billion of acquisitions. Revenue excluding contributions from joint ventures rose 13 per cent to £16.90 billion. Vodafone will buy back £2.5 billion of stock.

Earnings before interest, tax, depreciation and amortisation climbed 19 per cent to £6.62 billion. The figure excludes contributions from assets that Vodafone doesn't control.

Chief executive Arun Sarin, who took over in July from Sir Christopher Gent, inherited slowing sales growth and permits bought for more than US$18 billion to provide so-called third-generation services that aren't yet available. Investors have called for Sarin to rein in international expansion and return more cash to shareholders.

Vodafone said it added 5.7 million customers in the past six months, on a proportionate basis, taking the total of proportionate customers to 125.3 million at the end of September.