Vodafone vows to look after inherited customers

Vodafone chief executive Russell Stanners has reassured TelstraClear broadband customers they will be looked after by their new supplier, as rivals threaten to pick off any who are disaffected by the $840 million merger.

The Commerce Commission and the Overseas Investment Office said yesterday that they had unconditionally approved Vodafone's takeover of TelstraClear, which Vodafone plans to make official later today.

The customers acquired by Vodafone include about 150,000 TelstraClear cable network users in its consumer bastions of Wellington and Christchurch.

Independent testing by Wellington firm TrueNet has shown they enjoy some of the fastest internet services in New Zealand, but the cable networks are expected to be superseded by fibre-based ultrafast broadband in the next few years.

TelstraClear has not significantly improved its terms of service or data caps since late last year, concentrating instead on providing sweeteners to new customers elsewhere to sign up to copper-based plans.

Spokesman Gary Bowering admitted some internet providers had "jumped ahead" since its last plan changes.

Snap Internet boss Mark Petrie said the Christchurch internet provider saw the takeover as an opportunity. Snap had moved customers in both Wellington and Christchurch on to the latest iteration of copper-based broadband, VDSL, which could provide better value and in some cases faster connections, and on to fibre-based broadband. It would be stepping up its marketing efforts, he said.

"We have often seen the larger telcos very slow to come to market with anything innovative, particularly in the fixed-line space."

Wellington internet provider Actrix, which has about 20,000 customers, also saw an opportunity to differentiate itself on service and its local ownership, managing director Howard Lewis said.

Telecom chief executive Simon Moutter forecast that the merger could prove a distraction for Vodafone and TelstraClear, and it too aimed to exploit this.

However, Stanners said TelstraClear's cable customers should have no concerns. "That set of customers is the leading set of customers using high-speed broadband and we are very committed to continuing that."

Vodafone expects to eventually switch customers on the merged firm's copper and cable networks to fibre-based ultrafast broadband but Stanners was reluctant to commit to a time frame for the start of that process, saying the "mass market" migration to fibre would not begin until 2014 or 2015.

"We will be in the [fibre UFB] market when we have some good strong offerings and can deliver the right customer experience."

One industry insider forecast that Wellington would become "little more than a sales office" for Auckland-based Vodafone, despite Wellington being home to TelstraClear's head office until 2009, and about 500 of its 1300 staff.

Stanners said there would be no mass redundancies among the merged firm's 3200 employees.

"We are committed to Wellington, particularly committed to Christchurch. That is why we have bought the company - we strengthen ourselves in Wellington and Christchurch and regionally."

Vodafone has strongly hinted it could repatriate TelstraClear's outsourced contact centre in Manila to TelstraClear's main customer service centre in Christchurch.

"Vodafone customers really appreciate talking to our call centre agents when they are based in New Zealand," spokeswoman Sarah Newcombe said.

"As to the full details of what might happen in the future, that will be an important part of the planning we're now undertaking."

Green Party co-leader Russel Norman yesterday criticised the commission for approving the takeover, which he said was "about eliminating competition".

He said it would "inevitably lead to higher prices for end-users, businesses, and government".

But the commission said it saw little overlap between the firms except in the retail broadband market, which was wide open to competition.

Telecommunications Users Association chief executive Paul Brislen said the lobby group would have liked to have seen the commission put in place some kind of monitoring regime to "ensure no cosy duopoly could emerge", but also forecast the merged firm could provide "meaningful competition" to Telecom in the fixed-line market.


What happens next: Vodafone is expected to make its $840 million acquisition of TelstraClear official today.

TelstraClear chief executive Allan Freeth will leave the company tomorrow.

The businesses will run as standalone entities for about six months.

They will be fully integrated in the following year, ending in April 2014.

By then the merged firm will be branded as Vodafone, under chief executive Russell Stanners.