Vodafone’s Matt Williams on the state of the red telco nation

  • Telecommunications
  • May 21, 2014
  • Damien Venuto
Vodafone’s Matt Williams on the state of the red telco nation

While Telecom finds itself in identity limbo and as 2degrees makes its first foray into the high-value business-owner market, Vodafone continues to sit atop the Kiwi telco pile as the network with the most active users. So, following Sunday’s release of Vodafone’s bowl cut TVC featuring James Rolleston, StopPress had a quick chat with the red network’s consumer director Matt Williams on the company’s consistency in an increasingly diversified and competitive market.

Two of Vodafone’s last three promotional pushes have emphasised the superiority of its 4G network, so it comes as little surprise that Williams leads the discussion by pointing out how dominant the company has been in this department.

“We have certainly emerged in a leadership role in the market when it comes to 4G. We are enormously proud of our 4G offering. Our customers love it, and we already have 400,000 people using the service.”

These numbers are particularly significant given that both Telecom and 2degrees still lag behind in this department.

2degrees is currently trialling 4G in Auckland, and only aims to commercially introduce the service in July, after which plans will be initiated to roll it out in provincial areas in 2015.

Comparatively, Telecom is coming second in this race, but it has quite a lot of ground to make up on Vodafone’s reach of 37 regions.

Having already released 4G in the three main centres, the telco that will soon be known as Spark launched the service in Rangiora, Rolleston and Lincoln over the weekend.

And today, in what could be interpreted as an effort to bridge the gap between its offering and that of Vodafone, Telecom announced that it aims to also introduce the service in Dunedin, Rotorua, Blenheim and Nelson by September this year.

A release from Telecom says that over 60 percent of its customer base owns a smartphone, and that the average monthly data use for mobile customers on both 3G and 4G has grown by 52 percent over the past year.

“Once you arrive at that sort of tipping point you start to see a real change in behaviour,” said Telecom’s retail chief executive Chris Quin in the release. “In particular, we’re seeing a lot more uploading of data – often driven by people posting photos or videos to social media to share their experiences with friends. [And] this is a big change from the past when the pattern was very much customers downloading data, as you do when you open an image-rich website or access social media applications.”

Williams credits a similar insight as the premise of Vodafone’s bowl cut ad, and he says that FCB’s creative team “took inspiration directly from what customers are doing” and then showed through the TVC how this type of behaviour can be facilitated via the Supernet range of services.

Statistics from Vodafone suggest that 62 percent of Kiwis use video streaming websites more since upgrading from 3G, 4G users stream four times more content than 3G users, 24 percent of 4G users access social media more than 20 times a week and 44 percent of 4G users use their mobiles as portable hot spots so they can access the internet on their tablets or laptops. And this all translates into higher data usage, which in turn gives Vodafone a significant revenue stream.


(Source: Vodafone report on 4G)

Interestingly, Vodafone doesn’t charge its customers extra to use the 4G service and relies instead on the increased data usage for revenue.  

Williams wouldn’t say how long it would take the additional revenue earned due to increased data usage to offset the costly process of establishing such a broad 4G network, but he did say it was worth the risk to enter this area of the market so early.

“We had a real belief that it would work in terms of data gathered from other international markets. This is definitely one of the benefits of being part of a global group,” he says.

But being part of an international group also comes with certain complications, as evidenced by a quick glimpse across the Tasman.

While things seem to be going well on this side, Vodafone Australia is still trying to put out the fires that led to the departure of hundreds of thousands of customers—some inactive—in 2013.

Williams was however quick to draw a line between the Kiwi market and Australian markets, saying there are various features that differentiate the respective mobile landscapes. 

“The Vodafone group is enormously powerful. One of the things that struck me when I arrived back here after working in Europe for some time was that Vodafone is viewed very differently in Australia than it is in the UK, where it’s a market leader. In Australia, Vodafone is number three in the market, whereas it’s a market leader here and in Europe. The Australian situation is very different from what’s going on over here.”

Although not bleeding customers in the Australian proportions, Vodafone has also lost users since 2degrees entered the market in 2009.

Williams wouldn’t divulge his current customer numbers, but statistics from Nielsen, obtained from a user-based survey, illustrate that the New Zealand arm of the red network has lost approximately 175,000 users since 2010.

Telecom, which has seen its user base decrease by 230,000 (including Skinny), has been hit even harder by the arrival of the new competitor.

However, the user numbers for the respective mobile providers have stabilised in the past year, which is largely attributable to the fact that the 2degrees growth trajectory seems to have plateaued.

Despite 2degrees successfully winning customers from its competitors, a Herald article published in April last year suggested that customer numbers don't necessarily translate into high margins.

At the time of publication, the Herald’s article found that 2degrees’ 21 percent share of the market only resulted in a 12 percent revenue contribution, which in turn indicates that the company has a disproportionate number of low-value customers.

A Covec report released on behalf of 2degrees in November last year found that while 2degrees had successfully entered the market it was yet to make significant headway in the large enterprise or government segment.  

“2degrees has effectively disrupted the pre-pay segment of retail mobile markets since launching in 2009, but is yet to make a material impact on the more valuable post-pay consumer and business segments. It has not yet entered the corporate market segment in any material way,” said authors Aaron Schiff, John Small and Emma Lanigan when commenting on the current state of the market.

While 2degrees previously focused primarily on establishing a customer base, this changed in March when the mobile provider released a campaign via Special Group that was targeted specifically at business owners.

Despite this shift in focus by 2degrees, Williams says that Vodafone isn’t too concerned about 2degrees’ attempts to lure business owners into switching networks.

“We have a stronghold on the business market and it comes down to a few things: firstly, our Supernet packages give businesses competitive rates on everything they expect from their telco; secondly, the reach of our 4G service is now giving an added benefit to businesses; and lastly, we tell our stories in the appropriate places, trade magazines and relevant websites for example.”

He also says that 2degrees is predominantly targeting small- to medium-sized businesses, a category that doesn’t include Vodafone’s major, ARPU-inflating clients.

In spite of this air of confidence, Williams adds that he doesn’t underestimate the competition and that he always keeps tabs on what they’re doing.

Given that Williams admitted to staking out Vodafone’s competitors, StopPress asked him what he thought of Telecom’s recent Giganaire spot. And at this area of inquiry Williams couldn’t help but stray from the PR script by comparing the protagonists in the ad to an awkward group of dads embarrassing their children—something, he says, Vodafone tries to avoid in its promotional material.

“We try really hard to make our ads appeal to our target market, but we don’t try to be funny at expense of the message. It’s about balance. It’s really difficult to get it right, especially when you want to create something humorous,” he says.

“When we look at the bowl cut ad, it’s really a reflection of how people are connected. We wanted to tell that story in a way that would resonate with the target market, while still relaying the key messages about what Supernet offers.”   

This is a community discussion forum. Comment is free but please respect our rules:

  1. Don’t be abusive or use sweary type words
  2. Don’t break the law: libel, slander and defamatory comments are forbidden
  3. Don’t resort to name-calling, mean-spiritedness, or slagging off
  4. Don’t pretend to be someone else.

If we find you doing these things, your comments will be edited without recourse and you may be asked to go away and reconsider your actions.
We respect the right to free speech and anonymous comments. Don’t abuse the privilege.

Next page
Results for
Topics
Jobs
About

StopPress provides essential industry news and intelligence, updated daily. And the digital newsletter delivers the latest news to your inbox twice a week — for free!

©2009–2015 Tangible Media. All rights reserved.
Use of this site constitutes acceptance of our Privacy policy.

Advertise

Contact Vernene Medcalf at +64 21 628 200 to advertise in StopPress.

View Media Kit