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Vodafone NZ marks global enterprise turf after TelstraClear

When Vodafone New Zealand acquired TelstraClear last year there was much talk of how it was a good strategic fit. Even so there were also question marks over the $840 million price when many experts privately valued the business at closer to $500 million.

Now, more than a year after the deal, two things are clear. First, the strategic fit is better than it might have appeared at first sight to people looking at the deal in a strictly New Zealand context. Second, that $840 million acquisition cost doesn't look so outlandish.

That's because while buying TelstraClear may look like a straightforward New Zealand play, it actually fits neatly into Vodafone's global plans to offer telecommunications and information technology services to large multinational companies.

Vodafone NZ's global role


Vodafone NZ director of enterprise, Grant Hopkins, says while he now reports locally to CEO  Russell Stanners, he also has a direct line into the global enterprise team. He says the business focuses on, among other things, international voice and data, machine to machine communications and integrated communications. This is all backed-up by Vodafone's global IP and VPN services.

Of course, there is a local dimension to the acquisition. Vodafone New Zealand has effectively gone from being a mobile carrier with some fixed assets to a full-blown telco able to compete across the board. Yet even this is consistent with the parent company's global strategy. Australia is now Vodafone's only major market where it doesn't have a significant fixed-line business.

The acquisition means Vodafone now has roughly one-third of New Zealand's fixed broadband network. Recently it has folded TelstraClear's HFC network into a consumer strategy combining broadband, fixed line calling and television in a single package. And it picked up TelstraClear's mobile customers. 

Integration done


Vodafone now has 7000km of fibre and full access to Chorus assets. It's easy to overlook how important it is that Chorus is now completely outside of Telecom NZ.

Hopkins says while Vodafone got key physical assets when it acquired TelstraClear, it also got a lot of good people with relevant skills. The total head count is now at around 3000. He says those people are now all trained in the company's methodologies.

And then there's TelstraClear's customers. The company had a significant market share of New Zealand's top fifty enterprises - some of the most lucrative accounts in the country and a market segment where Vodafone was previously only a small player. Most TelstraClear customers stayed on through the transition, although Vodafone's true challenge on this will come when contracts are up for renewal.

Hopkins plans to go further down the market, he says his enterprise group is focused on the top 300 enterprise customers and the mid-market. There's also a Vodafone's Red brand for smaller organisations that focuses on delivering fixed-priced, predictable services.

Where next?


It's impossible to talk about fixed-line in New Zealand without talking about the ultrafast broadband network being rolled out. Vodafone's position is interesting because it now owns the HFC network in Wellington and Christchurch which, to some degree, competes with fibre. From the enterprise point of view, UFB is central.

Hopkins says he sees plenty of business coming from products like unified communications and cloud computing. He says Vodafone can add value by adding a layer of security. The machine-to-machine boom looks interesting from this point of view as well. He says Vodafone already has 800,000 machines connected to its network including power meters.

Just as you can't talk about fixed-line without mentioning UFB, you can't discuss Vodafone without talking mobile. The company remains the largest mobile data carrier in New Zealand. It's moved towards the high ground with an early and relatively comprehensive investment in 4G. This is a strength its global enterprise customers can also use.

What's clear about Vodafone's enterprise strategy is that it will play an important role in the company's future. As IDC reported last month, the traditional telecommunications market is in decline, lucrative enterprise services can go some way towards filling the revenue gap and do better when it comes to shoring up margins.

It's also interesting to see Vodafone is moving in a distinctly different direction to Telecom NZ's Gen-i unit. 

[digitl 2013]

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