NZ retailer bulks up in Australia

By PETER GRIFFIN

Eight years after opening its first shop in Newmarket, First Mobile has become a significant Australasian retailer with its acquisition of 26 Vodafone stores in Australia.

The deal, expected to be concluded next month, adds to the 16 it already has in Australia, and the 70 Vodafone stores it has in New Zealand.

The company has linked its fortunes entirely to Vodafone in exclusive retailing deals on both sides of the Tasman, a situation that has done it no harm here where Vodafone shares half the mobile market with Telecom Mobile.

It's a different story in Australia where, according to telecoms analyst Paul Budde, Vodafone has 18 per cent of the mobile market and is struggling against stiff competition from Telstra, Optus and 3G player Hutchison.

First Mobile's chairman and co-owner, Peter Taylor, said his company's opportunity for expansion came when Vodafone Australia restructured to make the business sustainable.

"Vodafone in Australia are doing well but they've been in a cost-cutting regime for the last two years since Grahame Maher took over."

Maher, the former head of Vodafone New Zealand, began the Australian division's retail divestment last year with the sale of 54 stores to Brackenbury Group.

Vodafone has now passed the management of its remaining 58 stores to First Mobile and Brackenbury unit Digicall.

The two companies will divest stores where there is duplication, leaving First Mobile with 42 stores and Digicall with 50, but they plan to have 150 stores between them by the end of next year.

First Mobile takes on 130 Vodafone staff, bringing staff numbers overall to around 500.

The success of mobile phone retailers was tightly linked to growth in mobile phone usage through the nineties but the industry consolidated in the last few years as mobile penetration moved above 60 per cent.

Taylor said Vodafone's introduction of new products such as PXT camera phones and the Vodafone Live service had kept margins "surprisingly stable".

First Mobile had annual revenue of more than $100 million, was profitable and already had private investment in hand to fund further expansion in Australia.

"It's one of the retail stories that's actually working for a New Zealand company in Australia," he said.

The Australian stores had long-term leases but First Mobile had raised money to re-fit stores.

Taylor had no plans to branch out into other areas of retail but as mobile usage changed First Mobile would sell more computer products.