Vodafone's stuff-up aimed at Telecom NZ?

Vodafone's stuff-up aimed at Telecom NZ?

Summary: I had always believed Vodafone to be the most savvy of marketers. Their brand and image does seem much more sexy and exciting than stodgy old Telecom NZ.

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On the surface, Vodafone's new $12 plans seem like a huge mistake. The telco has has incurred the wrath of competition regulators, forcing them to reconsider mobile termination rate regulation. But was Vodafone's move a mistake?

The Commerce Commission had voted 2-1 against regulating the rates. But then came Vodafone's Talk Add-on product, which costs only 6 cents a minute to landlines and other Vodafone numbers, but charges users 89 cents a minute to ring other networks.

No wonder the competition squealed. And the Commerce Commission decided to have another think on controlling the rates.

With the regulators now demanding regulation, it looks most unlikely Minister Steven Joyce will turn down such recommendations when he makes his decision shortly. This could well be the biggest blunder Vodafone has ever made in New Zealand...

...unless it sees its 'folly' as hurting Telecom more. While analysts say regulated termination rates will cost Vodafone $8 million per month in revenues, the regulation changes will cost Telecom New Zealand around $30 million in earnings before interest, tax, depreciation and amortisation for 2012.

Maybe it is not a case of a simple Vodafone cock-up, but rather a strategic move in a longer game of chess!

Topics: Telcos, Legal, New Zealand

Darren Greenwood

About Darren Greenwood

Darren Greenwood has been in journalism, not all of it IT, since the days of typewriters and long before the web spun its way around the world.

Coming from Yorkshire, he can be blunt, and though having resided in New Zealand, as well as Australia, for quite some time, he insists he is not one of the 'sheeple!'

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3 comments
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  • vodafone 8million/month, telecom 30 million/?
    this is a different angle for view this whole issue, it is inspiring...ummm
    webnation
  • Darren this is incorrect! The effect on Telecom may be 30mil NZD for the 2012 YEAR, not per month!! Also, don't listen to the 8mil figure per month that Vodafone is talking about... I don't think this is a "net" figure. i.e they may lose 8mil of revenue per month. But their MTR costs will be much lower also, lowering the net effect.

    http://www.nbr.co.nz/article/telecom-braces-30m-earnings-hit-122877
    smithrhy
  • Thanks smithrhy. You are right and I have clarified that sentence.

    Suzanne Tindal, News Editor
    stindal