VODAFONE NZ AN AMAZING SUCCESS STORY
This is one of the truly amazing success stories in telecommunications competition and it shows that it is possible to take on the incumbent and win.
In late 2003 the company became the largest mobile operator in the country, dethroning the incumbent Telecom.
This all happened in a relatively short period of time. It was not until 1998 that the company entered the New Zealand market and bought the operation from Bell South, which had not been very active at all. At a time when most countries in the western world had mobile penetration levels of 40%-plus, New Zealand was hovering under 20%. Telecom was fast asleep and in no hurry to bring more and better services to the New Zealanders who, like everybody else in the world, were very interested in taking up mobile services.
In fact, the situation was not dissimilar from what is happening today in the broadband market in New Zealand.
But in 1998 Vodafone decided to beat the lethargy and became a fierce competitor with innovative prices and services. Telecom was far too slow to react and as a result it has now handed over leadership to Vodafone. Being a uni-focused company, it is in a far better position to service the mobile market than the vertically-integrated Telecom, which has many more products and services to manage. On top of that, Telecom is struggling with three mobile strategies: an analogue one; a digital one, and a 3G one.
All of this together will secure a good future for Vodafone in New Zealand, If it wasn’t for the success in New Zealand I doubt very much if the company would still be in the region. In Australia the company is struggling to keep up with Telstra and Optus and is clearly under-performing. By streamlining the Asia Pacific operation Vodafone is still able to keep its business in Australia open, but further rationalisation is needed in Australia to secure a long-term position in the region. A lot depends on the success in New Zealand.
A more local problem is the fact that there is no room for three mobile operators in New Zealand. Apart from Telecom and Vodafone, TelstraClear has indicated it wants to enter the market, with a 3G service no less. Furthermore there is Econet; however it is not making much progress at all.
Consolidation amongst the three (potential) 3G players is essential and in 2004 it will become clearer what the likely outcome will be. In this process it does, of course, make sense to take the broader Trans-Tasman situation into account as well; however, this also further complicates the negotiations. There clearly is more synergy between Vodafone and TelstraClear, but so far negotiations have failed to deliver a solution that is acceptable to both sides.
It is too early to make a call, but certainly three competing 3G services is not the way to go.
See also:
Vodafone New Zealand
TelstraClear Limited – Overview
Telecom Corporation of New Zealand – Company Analyses (2001-2003)
New Zealand – Wireless Communications – Mobile Market Overview
New Zealand – Wireless Communications – Major Mobile Operators
New Zealand – Wireless Communications – Mobile Services
New Zealand – Wireless Communications – Wireless Broadband
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Tagged in: Asia, Australia, New Zealand & South Pacific
