Vodafone man with a big ambition

Russell Stanners thinks fixed lines have had their day. Picture / Paul Estcourt

Russell Stanners hobbles into the room sporting a cast on his right leg after tearing his Achilles tendon at a corporate team-building cricket match at Lord's and eases his way on to a chair.

The chief executive of Vodafone New Zealand is excited. "I'm getting my cast off soon, two days, can't wait."

Stanners, casual, with a boyish grin, wants his company to take on Telecom to become the number-one telecommunications company in the country in five years.

It is nothing if not ambitious but Stanners appears relatively unfazed.

"Why not?" he asks, twirling a beeping mobile phone in his right hand.

Vodafone occupies 20 per cent of the telco market compared with Telecom's 75 per cent. Success for Stanners will need a huge fall in market share for Telecom while Vodafone's game plan will have to be practically flawless.

Stanners said his team agonised over strategies weekly but the company had a strong card in its favour - the inevitable demise of customers' reliance on fixed-line networks in favour of wireless, mobile solutions.

And as the biggest mobile player, Vodafone has the jump on its competitors.

Stanners believes one of the most revealing announcements in the Telecom full-year result in August was that national calling minutes would drop by 8 to 10 per cent over the next 10 years.

The demise of fixed-line is accelerating, he says with a grin, and Vodafone plans to move quickly into the emerging wireless market.

"In the next five years, if all our dreams were to come true, we see no reason why we can't be the leading telco in New Zealand," he says.

"As a trend, every player in the industry believes voice will move to mobile. That is why we have a unique opportunity here in New Zealand, because we don't have a huge fixed infrastructure."

Investment in Auckland of fixed fibre-based networks - through which phone and internet services are delivered at higher speed than the traditional copper wire networks - has been low.

Australian-based Telstra came into the market in 1996 but did not invest in fibre because it, like many in the industry, believed regulation would happen sooner.

Still, despite the late regulatory card, Stanners is bemused by Telstra's reluctance to invest in fixed lines.

"Auckland is where we should have the most competitive infrastructure and we have the least and, where you think it would have the most build-out, it didn't happen," he said.

Telecom's fixed network was old and while some fibre had been laid in Auckland, it was still not a fully functioning network.

Now, regulatory change is in the air. The Government said in May that it would force Telecom to open its network to its competitors, called local loop unbundling, which led to $2.5 billion being wiped off the company's share price in a few months.

The unbundling legislation still needs to be finalised and many in the industry are waiting for the Commerce Commission's findings on wholesale pricing that could open the door for competitors who use Telecom's network to offer more competitive packages.

A key plank of Vodafone's plans to snatch Telecom's leading position is by introducing a mobile broadband package next month.

Vodafone plans to set up a network first with download speeds of 1.8 megabits per second, followed by 3.6mbps with plans to move to 7.2mbps and after that 14.4mbps.

Telecom has upgraded some customers to 2mbps and 3.5mbps and will introduce faster speeds - known as unconstrained - in October. But Telecom says these plans will only deliver what the network is capable of delivering at that time, so will vary among households.

Stanners does not want to reveal the exact nature of Vodafone's broadband package but calls it exciting.

"If we look at broadband, we don't see why people will not go to mobile broadband from fixed broadband, for the same reason they went for mobile phones," he says.

"Mobile was a backwater, then Vodafone made it an exciting marketplace and did our competitor stand still? No, they invested, and they invested really hard to try and beat us."

As the man charged to overtake Telecom, Stanners believes he has the know-how for the task.

He joined Vodafone as as director of business markets in 2002 and has been chief executive for 18 months.

It was in New York - "a huge juggernaut of a place" - that his career in the information technology industry really kicked on.

"It was right when all the dot-com boom was happening, so it was an exciting time."

He and his family returned to New Zealand in 2000 - a decision that Stanners found challenging.

"I quite clearly made the decision to give up my career, but in my heart of hearts I wanted to be back in New Zealand."

However, the small size of the market here came as a shock.

"When you come back the market is so small from a commerce point of view, it's like ... wow. That took a lot to get used to again and that was a challenge."

Stanners does not discount Telecom's dominant grip on the market and the challenge of toppling such an established company with such a strong brand.

"Last quarter was the first time we beat them in seven quarters in terms of [mobile] net connections in the market," he says.

"All this [new] regulation will do is allow competitors to enter the market, to invest a lot of money and maybe, just maybe, compete with Telecom. Competing with Telecom is very challenging."

It will take a "significant amount of investment" from players for there to be real change in the structure of the telco industry.

And Stanners is dubious about the hype that regulation will immediately open the floodgates for global players to swarm in.

In the mobile sector, he says, Orange, Hutch and Optus are the most likely candidates but have remained quiet.

Only Telstra - which last month said it would build a wireless network in Tauranga to test the feasibility of a national network - has acted.

"The truth of the market over the next three years is there will only be three major players - Telecom, Vodafone and Telstra - and the rest will have offerings that have some value in some niche markets."

Stanners said the smaller players that were consolidating did not pose much of a threat.

THE CV

* Russell Stanners

* Chief executive of Vodafone New Zealand.

* Age: 43

* Career: 15 years as director of IBM Asia Pacific and then global director of IBM telecommunications services in New York; managing director of Unisys New Zealand.

* Education: Bachelor of Commerce, Auckland University.

* Family: Wife Michelle, daughter Jessica and twin sons, James and Nathan.