2degrees rings up rapid customer growth

Tuesday 22nd March 2011

Mobile operator 2degrees has seen unprecedented growth in customers since its launch in late 2009, and the company could eventually take a third of the market, the Telecommunications Users' Association (Tuanz) says.

The mobile market was still dominated by Telecom and Vodafone, but 2degrees said it now has 580,112 customers, or the equivalent of nearly one in eight people.

The company had opened 10 stores, and planned to open another 30 stores by the end of the year, chief executive Eric Hertz said.

Data demand was doubling every two months, and the company's investors saw long-term growth potential in the business and the country's mobile market.

"That demand, and our plans to win even more customers, underpins our recent announcement of a $100 million investment in network capability," Hertz said.

2degrees had already invested $300 million in a third mobile phone network.

Shareholders included US-based mobile company Trilogy International Partners, Hautaki Trust and Communication Venture Partners.

Tuanz chief executive Paul Brislen said it was difficult to estimate 2degrees' share of the market because the information released by Telecom and Vodafone was not necessarily comparable, and market penetration was now more than 100% because some customers used more than one service.

But the company was doing "exceedingly well", and it was possible it could eventually take a third of the mobile market.

"Probably one of the fastest growth plans for a mobile telco coming into a market that's similar to New Zealand," Brislen told NZPA.

"They've come into the market with a very simple proposition - they have complicated it somewhat over the months since they launched ... But when they launched I think it was quite a breath of fresh air."

Other telcos' pricing plans were still deliberately confusing, he said, and there were too many plans.

But Telecom had quietly rejigged some on-account plans to mimic 2degrees' approach, while Vodafone had introduced "anynet" texts for customers wanting to text other networks.

"I think the others are sitting up and taking notice, if nothing else."

Telecom was strong in the South Island despite its much-hyped XT network falling over, and Vodafone was strong in Auckland. Given the regional variation, the three companies could eventually average a third of the market, he said.

However, it was yet to be seen whether 2degrees was making inroads in attracting the more valuable customers, or whether it was getting the lower spend, little use customers.

2degrees was targeting young urban professionals who were setting up flats or houses or business, the segment of the market which did not have landlines, which would accelerate the trend for mobile-only customers.

The company had also made its mark on the competitive environment, driving the regulation over termination rates which the company said were currently anticompetitive.

NZPA

Comments from our readers

No comments yet