Vodafone call deal takes fight to Telecom territory

Vodafone is making an aggressive play to wrench market share from Telecom in bundled mobile and home-phone products through the launch of a competitive calling plan.

This is Vodafone's first move to attack the fixed-line voice market - dominated by Telecom - with a bundled product. Telecom's fixed-line revenue was $976 million in the last financial year, down 1.8 per cent.

Vodafone shifted from being a company that offered only cellphone products when it bought fixed-line operator ihug for $41 million this month.

Yesterday, Vodafone and ihug said customers would be able to make an unlimited number of calls to one designated Vodafone mobile number for a flat rate of $10 a month.

Ihug has added the home-to-mobile calling service to plans released last month which allowed unlimited calls within New Zealand and overseas for a competitive price.

Shares in Telecom closed up 1c at $4.36.

IDC telecommunications analyst Chris Loh said Vodafone and ihug's product was positioned squarely against Telecom's Freedom plan, which allowed unlimited calls between a home line and a nominated Telecom 027 mobile for just $10 a month.

"This is an early example of how, by acquiring ihug, Vodafone has positioned itself to meet the substantial challenge of fixed-mobile convergence offerings from Telecom," he said.

Vodafone and ihug customers were likely to be receptive to the hybrid services of the two companies.

Loh said Vodafone would next plan to attack Telecom's dominance in the fixed-line space with consumer VoIP (voice over internet protocol) services.

Calling card

* Vodafone has around 20 per cent of the total telecommunications market.

* By buying ihug it can start earning calling revenue.

* Telecom's calling revenue in the last financial year was $976 million.