Telecom rebrand not Spark-ing with experts

TOM PULLAR-STRECKER AND JOSH MARTIN
Last updated 14:15 21/02/2014
Fairfax NZ

Telecom CEO, Simon Moutter, talks about the rebrand to Spark

Public opinion on Telecom rebranding

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NEW SPARK: Telecom boss Simon Moutter has already changed his email signature.
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JOHN SELKIRK/Fairfax NZ
NEW NAME: Telecom CEO Simon Moutter says the company has outgrown the present name.
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Brand and marketing experts have weighed in on Telecom's renaming itself Spark, with one saying it was aimed at a young, tech-savvy digital generation.

Impact PR consultant Fleur Revell, who has worked with technology and telecommunications companies, said the move by Telecom would lead to uncertainty and not resonate with its older, conservative clients.

"For all its past issues Telecom has a legacy with our nation," Revell said.

"It's synonymous as a New Zealand brand and one that generations have come to understand and trust."

To discard decades of built-up brand equity was risky and the replacement name was "a strange one", Revell said.

"The last thing I'm sure anyone would want to see in their home telecommunications hardware is a spark."

Telecom said the rebranding effort would cost about $20 million, money Revell said could have better invested in backing up the brand message.

"Changing the name could be seen as an admission that something was wrong ... why not invest the rebrand money in improving customer services or re-employing Kiwi call-centre staff?" she said.

Otago University associate professor of marketing Lisa McNeill said the telco's name change most probably reflected the change in technology.

"With Telecom as a name, the perception for some may be viewed with old landline phones, when in fact the operations for them is now far beyond that service," McNeill said.

"It's the digital generation now and that's who they want to speak to.

"Spark will not come without risks, because you are getting rid of a name that has some brand recognition and loyalty."

Customers would catch on that their Telecom bills were now their Spark bills and the company would manage the changeover, so there would probably be minimal disconnect, she said.

Spark, as a brand value, would not be starting from scratch as it would inherit the market dynamics of Telecom, but could shake off some of Telecom's negative brand association, McNeill said.

"For customers who were annoyed with Telecom, they might give Spark a go, because the rebrand signals to customers that the company has realised there are problems and wants to improve itself."

Revell said New Zealand Post was another brand ripe for a name change and should follow Telecom's lead.

"Still, in many respects it operates in the Dark Ages," she said.

"Long service queues to buy a postage stamp at any time of the day seem out of place in today's modern world."

Telecom sent an email to brand experts this morning to explain the background and reasons for the name change.

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Telecom expects to spend about $20 million changing its name to Spark and will launch a new internet television business, ShowmeTV.

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The company announced this morning that it would change its name later this year.

Spokesman Andrew Pirie said the cost of the rebrand was an estimate, adding: "There are a lot of signs to change."

Chief executive Simon Moutter said the new name for Telecom would better reflect the company's "new direction" and aspirations.

"Spark is a word that has life and energy, and links to the creativity of New Zealanders, the modern tech economy and our desire to enable our customers to thrive," he said.

ShowmeTV would launch in the next few months, Moutter said.

"We're keeping our cards close to our chest on details such as pricing and the content catalogue. But . . . it's clear that if we're going to successfully play in this space, against very formidable competitors, then we must be bold and committed - we can't just 'dip our toe in the water'," he said.

Pirie said ShowmeTV would be available to non-Telecom as well as Telecom customers.

Live sports would not be an "immediate priority" for the television service, however he would not rule out the company bidding for live rights to stream All Blacks games, saying it would want to keep its options open.

The company today reported a 2.5 per cent rise in net interim net profit to $167m. Revenues fell 3 per cent to $1.847 billion.

Its shares were trading down 3.1 per cent at $2.34 shortly after the NZX opened.

Telecom will retain its Skinny Mobile brand and its Revera brand, for the data centre business it acquired at a cost of $96m last year, but its main information technology business, Gen-i, will be renamed Spark Digital Solutions.

Telecom retail boss Chris Quin strongly hinted in 2012, when he was competing for job of company chief executive, that he favoured rebranding Telecom, but said it would be a decision for the company's board.

Alan Gourdie, retail boss at the time, said Telecom would first have to earn the right to a new identity by "getting the basics rights".

The prospect of a new name then appeared to decline after Moutter, who was appointed to the top job, appeared lukewarm on the idea.

Chairman Mark Verbiest said Telecom anticipated an improved financial performance in the second half of this financial year, with broadband revenues beginning to stabilise, mobile growth continuing and its turnaround programme delivering tangible free cash flow improvements.

"As a result we expect adjusted earnings before tax, interest, depreciation and amortisation from continuing operations for the full year to be in the range of $925m to $945m, excluding the AAPT sale proceeds and rebranding costs," he said.

- Fairfax Media

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