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Vodafone's Reseller Timing Impeccable

17 August 2006

Vodafone's Reseller Timing Impeccable - Masters of Regulatory Gaming

The timing of its announcement regarding its heads of agreements with three mobile resellers is classic regulatory gaming on Vodafone's part - particularly with the Commerce Commission reviewing mobile and Parliament just about to get its teeth stuck into the Telecommunications Amendment bill.

"From Vodafone's perspective, it makes sense to foster some different brand names and share a little retail margin in order to ward off pending regulatory changes to co-location and roaming that will facilitate real competition at a network level," said Econet Chief Executive, Tex Edwards.

"It will also help Vodafone hide some of its two thirds market dominance and brand presence.

"We have no doubt the Commerce Commission and the policy-makers will see this for what it is - just regulatory gaming by Vodafone to take the heat off its GSM monopoly.

"Econet wishes the new resellers all the best, but 'skinny MVNOs' or resellers aren't going to create a positive outcome for consumers," said Edwards.

"While Vodafone continues to hold a GSM monopoly, it will continue to control the market and hand out resell deals on its own terms. Only a third or fourth network, driving genuine price competition will generate consumer benefits and innovation. It costs about $200m to set up a network and mobile is a $3 billion market, growing to a $4 billion by 2010 - so there is plenty of room."

"At least this illustrates Vodafone is genuinely worried. It knows consumers are fed up and it knows regulators, policy-makers and legislators are onto its GSM monopoly. It knows it needs to pull some tricks out of the bag to avoid regulatory changes to roaming and co-location," said Edwards.

ENDS

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