Vodafone sitting pretty in NZ

By PETER GRIFFIN

Growing revenues and customer numbers continue to make Vodafone's New Zealand operation a sweet spot for the global mobile phone giant, which is in no hurry to make the costly jump to faster, third-generation services here.

Local managing director Tim Miles said Vodafone had overtaken arch-rival Telecom in terms of growth despite the latter having a network geared to high-speed data.

"Our revenues last year grew 30 per cent. If you look at the books, last year [Telecom] grew less than 5 per cent and most of that was through increasing interconnect charges," said Miles.

Much of Vodafone's growth has come in wrapping new services around existing platforms such as text messaging.

Miles said more than 50,000 customers had upgraded to Vodafone's heavily marketed Sim2 service, which offers access to dozens of text-based information and entertainment services at a price. A few thousand phones on the network were capable of sending "PXT" photo messages at 50c per message. The expensive PXT-capable phones would come down in price before Christmas, he said.

After spending £13 billion ($41 billion) buying third-generation mobile licences in Europe, Vodafone is preparing from next year to introduce 3G services starting in Japan.

Locally, Miles said, Vodafone was committing "some" capital expenditure to prepare for the next technology jump, but interest in services based on current mobile technology showed such an upgrade would be premature.

"I won't tell you the timeframe, that's very commercially sensitive," he said.

"There isn't a critical mass of customers who want or can use 60 to 100kbps [kilobits per second]. We want to be ahead of everybody, but not three years ahead of them."

Figures for the half-year ended September 30 are certainly impressive. While not divulging any amounts, Vodafone increased earnings before interest, tax, depreciation and amortisation by 34 per cent. Revenue was up 18 per cent, which would have brought in about $350 million in the six-month period.

Vodafone's customers are outspending their counterparts on the Telecom network by a large margin. Prepaid customers spend an average of $301 a year, compared with $85.20 for Telecom. Vodafone's post-paid account customers spend on average $1840 a year compared with $885.60 for Telecom.

Telecom earned $32 million from its mobile operations in the three months to September 30 on revenue of $189 million. It has shed more than 60,000 "lower value" subscribers to give it a base of 1.25 million compared with Vodafone's 1.1 million, up around 60,000 in the past six months.

Miles said an article in the Australian Financial Review last week reporting rumours of a TelstraClear buy-out of Vodafone New Zealand was unfounded.

"Whatever they're on, I want some. If you were Vodafone, why would you sell? Does the Vodafone Group look like it needs the money?"