Mobile giant rings up record profit

Fairfax

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Vodafone New Zealand has continued to make hay, posting a 18 per cent jump in profits to a record $191 million in the year to March.

Revenue was up 10 per cent to $1.5 billion, according to accounts just filed with the Companies Office.

Vodafone agreed to pay a $742 million dividend to its British parent, after a $500 million dividend in 2006.

The increase in Vodafone's pre-tax profit margins to 15 per cent comes as the Government steps up efforts to bring more competition to the $2.3 billion mobile market.

Communications Minister David Cunliffe said he was encouraging Vodafone to reach an agreement with third network operator NZ Communications that would let the new entrant rent space on Vodafone's cellphone towers, that it could use to install its own equipment. "I understand that good progress is being made in those negotiations."

The Commerce Commission is investigating whether to regulate the fees Vodafone and Telecom charge one another to terminate mobile calls on their networks, which could bring down the price of calls and texts across networks.

Also potentially under consideration is a ban on "two-tier" pricing, under which Vodafone and Telecom are allowed to charge customers more for calling and texting people who are not on their networks, and lower prices for "on-net" calls.

Australian telecommunications analyst Paul Budde said Vodafone's share of mobile traffic was officially around 65 per cent, but that some industry sources claimed it was actually as high as 75 per cent.

"On the one hand, many in the industry have admired the way Vodafone has been able to wrest the mobile market away from Telecom, especially as it has done this in a very strategic and tactical way - great business brinkmanship.

"However, at the same time, Vodafone is now hurting competition in the all-important mobile market. This means that New Zealanders are paying higher prices and are missing out on some of the innovations that can only be achieved through competition."

Telecom is expected to announce this week that it will build a nationwide 3G mobile network using 850MHz WCDMA technology that has been deployed successfully by Telstra in Australia. Vodafone is also upgrading its rural network to 3G at a cost of tens of millions of dollars using its 900MHz spectrum.

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