Vector 'must rethink strategy'

Vector's failure to win the Auckland part of the ultra-fast broadband contract means it will have to rethink growth strategies even if it picks up some work from the deal, analysts say.

It is estimated the utility company spent millions of dollars on the unsuccessful bid, although it could pick up some building work in collaboration with bid winner Telecom.

Vector was not commenting yesterday but its majority shareholder, the Auckland Energy Consumer Trust, said the company was disappointed.

"We thought we had a chance. Vector has been heavily tied up in this and made a big investment," said trust chairman Warren Kyd.

Forsyth Barr analyst Andrew Harvey-Green said given the number of consultants involved in such a bid the spending would not have been trivial. "It wouldn't have been as high as Telecom because they had more issues to deal with and were around New Zealand."

Vector already has fibre rolled out in parts of Auckland, including a project with Vodafone.

"I wouldn't expect them to roll out significant amounts of fibre from what they already have. Their ambitions will be somewhat curtailed," said Harvey-Green.

Vector's share price rose following the announcement on Tuesday and climbed again yesterday, closing up 3c at $2.48.

"There was always a little bit of uncertainty around what this was going to mean for Vector. It wasn't going to be a game-changer."

Hamilton Hindin Greene analyst James Smalley said the broadband decision hadn't affected Vector's fundamentals and the market reaction had been muted. "[But] what it has affected is their growth."