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Spark targets Vodafone's rural broadband customers

New Zealand-based Spark has announced a nationwide trial of 4G services and a NZ$100 million on-market share buyback.
Written by Rob O'Neill, Contributor

New Zealand telco Spark is setting its sites on rural customers it says are receiving substandard service though the government's Rural Broadband Initiative (RBI).

The government has been progressively extending its RBI program, which is largely delivered by Spark rival Vodafone over 3G and partly funded by a controversial industry levy.

"We are extremely close to launching a new, competitive and affordable product giving rural customers fast and reliable internet access using the 4G network on the 700MHz spectrum," Spark's general manager of wholesale and product Lindsay Cowley said.

Cowley said the uptake of existing RBI products has been "quite low", and there have been murmurings of dissatisfaction with the service.

"Spark's wireless broadband product will address these concerns and deliver speeds of up to 10 times faster than what some customers tell us they are experiencing on the current 3G RBI product," he said.

Cowley said Spark held back on launching a wireless broadband product until it was confident of delivering a quality service to regional and rural customers on 4G.

He said Spark's service won't require a technician to install or an external aerial, unlike the RBI product.

Spark further announced a NZ$100 million on-market share buyback during the remainder of 2015 following recent divestments, including Telecom Rentals and its 60 percent stake in Telecom Cook Islands.

"Spark New Zealand's balance sheet is now under-levered," Spark said. "The purpose of the on-market share buyback is to return gearing to a more appropriate level for the company."

Last week, the Labour opposition called for an inquiry into the NZ$400 million RBI before the government invested a further NZ$150 million, as announced in last month's Budget.

"Rural New Zealanders and InternetNZ have expressed strong concerns that the Rural Broadband Initiative (RBI) isn't delivering quality internet and has connected very few households," shadow ICT spokesperson Clare Curran said.

"It's simply reckless for the government to pump another NZ$150 million into the scheme in the form of a broadband tax imposed on internet providers that will be passed on to consumers without evaluating the success of the initial NZ$400 million scheme."

Last year, Spark acquired more 4G spectrum than any other telco in a government auction, investing NZ$158 million to secure four lots of the 700MHz spectrum.

Cowley said 700MHz offers greater reach of coverage from the cell site over other frequencies, making it ideal for rural applications.

"We've been working hard and fast over the past 12 months to leverage the spectrum advantage we have by successfully rolling out 4G to 150 cell sites across the country on 700MHz," he said.

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