DSE axes Vodafone

CLAIRE ROGERS
Last updated 05:00 14/03/2011

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Dick Smith Electronics has hung up on Vodafone, deciding to no longer stock its products.

The move comes as Vodafone tries to stem its customer losses to 2degrees, which has now captured more than 5 per cent of the retail market by revenue, and as mobile operators overhaul their retail channels in a bid to boost sales and cut costs.

A source said the split would be a big loss for Vodafone as Dick Smith was understood to be its biggest independent retailer.

Vodafone mobiles have disappeared from Dick Smith's website and some of its stores, and Vodafone no longer lists the retailer as a supplier on its site.

Vodafone spokeswoman Michelle Baguley confirmed Dick Smith had decided not to stock its range.

"We've been proactively trying to discuss a business model that would suit both parties for some time. We'd still like to think that we can find a solution and work together in future."

Dick Smith would not comment. A staff member at one of its Wellington stores – which had discounted its Vodafone mobiles – said it was phasing out its Vodafone stock but he did not know why.

The source speculated Telecom and 2degrees may have been able to offer Dick Smith more in the way of training and merchandising support than an under-pressure Vodafone, which was losing pre-pay market share to 2degrees.

IDC analyst Rosemary Spragg said as of December Vodafone held 57 per cent of retail revenue in the mobile market. That compared with 63 per cent in February last year.

Telecom's share as of December was 36 per cent, compared with 37 per cent in February 2010, while newcomer 2degrees claimed 5.5 per cent.

Vodafone had 47 per cent of retail connections by the end of last year, while Telecom and 2degrees had 41.5 and 10.5 per cent respectively.

Both Telecom and Vodafone had experienced three successive quarters of pre-pay losses in the first nine months of last year, Ms Spragg said.

Vodafone's pre-pay losses would be a mix of customers jumping ship to 2degrees and customers migrating to post-paid plans, she said.

Overall, the retail and commercial mobile market is worth about $2 billion, annually.

Vodafone bought its biggest specialist dealer chain First Mobile last year for an undisclosed sum. That was amid speculation Vodafone dealers were struggling because of the economic downturn, market saturation and a squeeze on margins.

Telecom is believed to be closing about 30 of its 100 stores as part of a switch to a "new service and sales model" that followed a review of its retailer and dealer channel strategy.

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Telecom's revamp is expected to see it shift the focus of many of its own-branded stores away from a particular concentration on the mobile market, using them instead to market and sell its full range of fixed-line and mobile services.

2degrees has meanwhile begun to open its own stores around the country, and plans to have about 50 open by year end.

Ms Spragg said Vodafone had gained about 7000 pre-pay customers in the last quarter of 2010 after losing about 44,000 in the third quarter.

"It's quite a volatile market still which reflects the increase in competition.

"The December quarter is always a different one because it's Christmas and you do see a lot more pre-pay connections as people buy mobiles for presents."

- © Fairfax NZ News

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