Vodafone to execute 100% NZ-centric strategy

Friday 2nd August 2019

Vodafone New Zealand says its new ownership means it can execute a New Zealand-centric strategy while retaining a close relationship with the global Vodafone Group.

“I think we have created the best of both worlds,” chief executive Jason Paris told BusinessDesk shortly after Infratil and Canada's Brookfield Asset Management officially took over as owners.

“We have long-term investors with a great track record in Infratil and Brookfield, who have bought into our strategy and want to accelerate it," he said. The New Zealand business has "maintained a very strong relationship with Vodafone Group."

Among other things, Vodafone New Zealand can retain the Vodafone brand, its roaming relationship with the group and procurement rights, said Paris.

Infratil and Brookfield bought the business for $3.4 billion. Its first move after that was to announce plans to switch on a 5G network in Auckland, Wellington, Christchurch and Queenstown in December.

Paris said the new ownership will open up other doors for the telco.

“Probably, over the past five years there’s been a bunch of things that this organization would have liked to have done - whether it's launch multi-brand, whether it's accelerating fixed wireless access, whether it's going bigger and bolder on unlimited plans earlier - that we couldn’t because it wasn’t part of the global strategy,” he said.

With Infratil and Brookfield as owners “we can execute a 100 percent New Zealand-centric strategy,” Paris added.

The new ownership means “there’s an opportunity that, when the business case makes sense, we can do it,” said Paris.

According to Paris, getting set up for the roll-out of 5G involved “tens of millions of dollars,” but it wasn’t new investment.

“We had a five-year plan to roll out 5G and we just decided the timing is right to do it a little bit earlier. We made some sensible and smart investments a few years ago to create an opportunity to have a spectrum advantage,” he said.

Paris said work had been underway to prepare the 4G towers to handle the heavier 5G kit and 120 would be up and running initially.

Vodafone bought some existing 3.5 gigahertz spectrum as part of the deal to buy TelstraClear in 2012. While the firm will have to relinquish that when the government auctions the spectrum next year, Paris said the network is future-proofed.

"The timing of when it is relinquished and how it happens will depend on the timing of the auction and how much spectrum everyone purchases and in which band they buy it," he said.

The government is working towards holding the first auction of 3.5 GHz band spectrum next year, with the national rights available for use in November 2022.

"The government will allocate the amount of spectrum you can buy and our preference is that we are allowed to purchase up to 100 megahertz, he said. A cabinet paper issued in February on the allocation of radio spectrum for 5G mobile said officials have identified 390 megahertz of spectrum that could be allocated in the 3.5 GHz band.

Paris said his understanding was that Spark also wanted 100 megahertz. He wasn't sure how much 2degrees would want and said that the government might ring-fence some for a possible fourth entrant.

"That's still yet to be determined and we don't know how it's going to play out, but up until then we are launching 5G and we are in a good space," he said.

The next port-of-call for investment will be on the services front, Paris said.

“We are going to do a big play in service. Our customer service isn’t where it needs to be at the moment and hasn't been for quite some time."

(BusinessDesk)

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