Vodafone sales surge as Telecom holds fire

By RICHARD BRADDELL utilities writer

New Zealanders' appetite for mobile phones has continued unabated, with Vodafone reporting a record 136,000 new customers in the first quarter of this year.

Eighteen per cent growth, in what is normally the slow, post-Christmas market, took Vodafone's customer total to 889,000, still short of the 1.15 million recorded by Telecom at the end of December.

Telecom will report its mobile performance next month. If it has matched Vodafone, more than 2.2 million mobile phones would be in use, with penetration at around 60 per cent of the population, compared with 33 per cent at the start of 2000.

Vodafone's continuing strong expansion surprised one telecommunications analyst, who said it was unlikely that Telecom had matched its rival's growth since it was more interested in customer retention than acquisition ahead of the launch of its CDMA digital network.

Vodafone's chief financial officer, Mark Steinberg, put the strong growth down to buoyant retail conditions that had continued from Christmas into this year.

The announcement by Vodafone yesterday also included details on average revenues per user (ARPU), a commonly used measure of income in the industry.

Telecom's ARPU appears to be significantly lower, with average annual revenue of $472 (based on the annualised monthly figures disclosed for the six months to December) well short of Vodafone's $731.

Telecom may be at a disadvantage because many of its prepaid customers bought their phones from The Warehouse, which operates a virtual cellular network under its own brand and retains value-added income for itself.

Vodafone also dominates the lucrative text-messaging market, which has become a craze among young customers, and the valuable transtasman call roaming popular with business customers.

Telecom will offer the latter only from the middle of this year when it launches its CDMA mobile network.

But the unfavourable comparison also owes much to Vodafone's figures, including higher revenues from six to 12 months ago before margins declined, perhaps by 20 per cent.

Also, Telecom's figures exclude inbound revenue. One analyst estimated that with inbound revenue included, Telecom's ARPU was more likely $660.

Telecom has claimed that its market research is telling it that its mobile market share is being maintained. But an analyst said it was more likely to want to retain existing customers ahead of the CDMA network launch, rather than acquire new ones, who might then want to switch to the new technology.