Newest telco wants to play on level field

Mike Reynolds says it was the appeal of running a start-up again - and some unfinished business - that brought him back to New Zealand.

Sports-mad telco executive Mike Reynolds likes to play by the rules.

Although the head of soon-to-launch mobile network 2degrees said he favours less rather than more regulation, "every game has to have a referee, every game has to have a clearly defined set of rules".

The mobile "start-up" - which has yet to sign on customers eight years after first signalling its intention to launch - has generally garnered more attention for railing against the lack of telecommunications regulation than its network build.

"It's the nature of the situation here, those rules are as yet not defined or loosely defined in a lot of areas," said Reynolds.

He said getting in front of the regulatory authorities is a necessary evil of being a challenger to a market dominated by Telecom and Vodafone.

Currently awaiting a decision on mobile termination rates - the costs mobile companies charge each other for receiving a call from a rival network - 2degrees has also sought regulatory help in settling deals to roam on Vodafone's network in areas where it doesn't have coverage and locating transmission equipment on or near its rivals' transmission towers.

Through its various guises, first as Econet Wireless then more recently NZ Communications, the company had been typified by red ink on its balance sheet, launch-date blow outs, regulatory demands and its ebullient frontman/shareholder Simon "Tex" Edwards. Reynolds, who joined 2degrees last July from Singaporean telco StarHub, recognises the company's chequered history but says with fresh faces around the board table, new management line-up, capital from three international telecommunications investors and a new brand the company is a different organisation.

But a lot has changed since Econet teamed up with Maori spectrum holders Hautaki Trust in 2001 to build a mobile network. Back then only 60 per cent of New Zealanders had a mobile phone. Now the penetration rate stands at over 100 per cent, meaning there are more mobile phones and devices than people.

Reynolds said no third mobile operator has ever entered a market once it had reached full mobile penetration - a challenge that attracted him to the job.

"If you take that at face value, that everybody has a phone, then every customer we get has to come from the other guys," said Reynolds.

It's his second stint in New Zealand. He was here for 18 months in the early 90s with BellSouth before returning to the US to run a start-up company for BellSouth.

It was the appeal of running a start-up again and the feeling of unfinished business that brought him back to New Zealand.

He and his wife Sherry still consider the US home, splitting their time between New Zealand and a house in Tampa, Florida.

Reynolds said having been in New Zealand before he was "very disappointed" to see how the market had evolved.

He said the "pathetic" usage figures - about a fifth of the 500 minutes per month typical in Singapore - were unique to New Zealand.

"When you see usage that low ... it just looks to me to be a market where there's huge opportunity," said Reynolds.

While he will have a battle royal to grab significant market share from Vodafone and Telecom, Reynolds sees that the pie can get a lot bigger.

StarHub's arrival on the mobile scene in Singapore in 2000 came three years after the second mobile operator. Since then it has grown to include fixed-line and cable TV offerings and is now Singapore's number two telco.

Reynolds said the success of StarHub showed there was room for three healthy operations - all are now publicly listed - and customers were benefiting from competition.

He said there was definitely room for more than two operators in New Zealand.

Asked if in the years of delays 2degrees had missed its opportunity in the New Zealand market, Reynolds admitted the timing could have been better.

He said while mistakes had been made in the past, the revision of the Telecommunications Act in 2006 cracked the door open for 2degrees.

For now a dicky shoulder is keeping Reynolds from playing golf and tennis, but he'll be needing all that energy to get some runs on the board when the 2degrees network goes live this year.

Mike Reynolds

* Chief executive of soon-to-launch mobile operator 2degrees.
* Age 55.
* Married to Sherry, one son, 24, at dental school in the United States.
* Home in Tampa, Florida.
* MBA and Bachelor of Business from University of Georgia.