Story image

’Now’s good’ for TelstraClear to buy a mobile network

31 May 2012

Could TelstraClear be eying up a takeover of Vodafone New Zealand’s business, or even the mobile division of Telecom?

That’s a scenario put forward by Brisbane-based Nicole McCormick, senior telco strategy analyst, Asia-Pacific for research firm Ovum.

McCormick argues that Vodafone is likely to be considering quitting its business in New Zealand and Australia so it can focus on larger, more lucrative opportunities in Europe.

She also says Telecom may even be thinking about getting out of the mobile game, given the imminent arrival of LTE, which brings with it expensive spectrum acquisitions and investment in new technology.

At the same time, TelstraClear’s parent company, Australian telco giant Telstra, has cash to invest and an expansion into New Zealand would seem to make sense.

TelstraClear CEO Allan Freeth recently lamented over the state of the local telco sector, comparing it to a frog being slowly boiled alive in a pot of water.

Could that lethal cauldron turn into an invigoratingly pleasant spa pool for TelstraClear if it had a nice mobile network to complement its substantial fixed broadband network?

TelstraClear has invested significantly in its fixed New Zealand-wide network over the years, but always seems to have suffered from the disinterest of its parent across the Tasman. For a long time, Telstra seems to have been distracted by things going on in its home market – to the point where it has never been prepared to stump up the decent amount of cap-ex and operational support to tackle the New Zealand market seriously.

TelstraClear currently has about 50,000 mobile customers, and is a virtual mobile operator using Telecom’s network. The company has dabbled with its own mobile network in the past, spending about $35 million before pulling the plug on a trial in Tauranga in 2007.

TelstraClear also isn’t afraid to innovate on product offerings, most recently with a no-free-calling landline option that solves a problem many consumers have long complained about: the high monthly cost of renting a phone line when it isn’t used to make many calls.

With the significant resources of Telstra behind it, TelstraClear has the power to have a big influence on the New Zealand mobile market, and perhaps in the process avoid becoming a boiled frog. Whether it gets a chance to have such an influence, however, is likely to depend on the current major players in the local mobile space and how they see their futures in this country.