Economic impacts

Man drawing arrows representing growth in the economy

At Vodafone, managing the economic impacts of our operations is core to ensuring that we remain a sustainable business

With the purchase of TelstraClear, we play an even more significant role in providing the infrastructure and services that are necessary to drive economic growth in New Zealand. As a telecommunications provider, our economic impact extends far beyond our direct financial contribution to the economy.

Telecommunications products and services act as an economic enabler, facilitating coordination of people and resources, breaking down geographic isolation, increasing innovation and boosting productivity.

 

TelstraClear purchase

Vodafone's purchase of TelstraClear for $840 million in October 2012 brings together two businesses with complementary strengths. The purchase brings proven experience and capability in business customer solutions, fixed services and TV to Vodafone as well as strengthening our national presence, particularly in Christchurch.

The purchase of TelstraClear also brings us closer to meeting our objective to be New Zealand's leading communications business and most admired company in New Zealand. We will only achieve these goals by winning the confidence, trust and loyalty of the New Zealand public by competing effectively and continuing to offer great service, great value and the best network.

It will also strongly position Vodafone as the leading challenger in both the fixed access / broadband market and the PayTV market. Crucially, the acquisition positions Vodafone to lead in the emerging fibre market, and enables us to build a broad range of total communications capabilities for business including network services and data management services.

Competition

Graph of Economic impact

Intense competition has continued to characterise the consumer mobile market for the past year for Vodafone. In the final quarter of the year we reported a loss of 7,000 mobile customers, bringing our total customer numbers to 2,307,000 with 66.7% on prepay. The Commerce Commission Telecommunications Monitoring Report 2012 showed that our market share by connections was 42% as at 30 June 2012. The Commerce Commission has noted that the convergence trend in market share led to a further fall in the retail mobile market concentration.

We have continued to grow in the fixed broadband market, increasing our customer base by 13 percent year on year.

Graph of internet connection share in NZ

Infrastructure investment

During the past year, Vodafone invested over $100million its network, most significantly in dual carrier 3G, Rural Broadband roll out and the introduction of the world's fastest mobile technology, 4G.

Faster mobile broadband: Dual Carrier and 4G

During the year Vodafone accelerated its rollout of Dual Carrier 3G to many of New Zealand's urban centres, doubling the speed at which data could be sent and received. The company first introduced Dual Carrier HSPA+ in December 2010. Then in February 2013 Vodafone became the first network in New Zealand to launch 4G in parts of Auckland, with Christchurch following in May and further centres planned for the coming year. Also known as LTE, 4G offers a high speed mobile data connection, providing almost instantaneous web page loading and streaming media experiences without the wait. For business customers it means smooth video conferencing, seamless connection to the cloud and no delays when using hosted applications.

Addressing the digital divide: Rural Broadband Initiative (RBI)

Vodafone is the Government's partner selected to roll out the mobile component of the Rural Broadband Initiative. During this five year project, Vodafone will construct 154 new fibre-connected cell phone towers and upgrade 380 existing cell towers to deliver the Government's objective to:

  • connect 97 percent of schools to fibre, enabling speeds of at least 100 Mbps, with the remaining three percent to achieve speeds of at least 10 Mbps; and
  • improve coverage of fast broadband services so that 97 percent of New Zealand households and enterprises are able to access broadband services of five Mbps or better, with the remaining three percent to achieve speeds of at least one Mbps.

At 31 March 2013, Vodafone had built 40 new sites of which 36 are live; and had upgraded 145 existing sites, providing coverage to over 100,000 households. The mast at Claris on Great Barrier is run by wind and solar, and is completely off the main electricity grid. It is our third renewably powered site.

Faster urban broadband: UltraFast Broadband Initiatives

Through the UltraFast Broadband Initiative (UFB), the government is investing up to $1.35 billion to enable 75% of New Zealanders to access fibre to the premise, capable of peak speeds of at least 100Mbps, by the end of 2019. As at 31 March 2013 168,599 premises had been passed by the service with 5,133 end users connecting to it.

Vodafone is currently testing a range of UFB products in customer trials so that we can provide schools, businesses and homes with great value, high quality UFB packages that will open up our classrooms, businesses and households to new opportunities and allow us all to enjoy the latest technology.

Regulation

This reporting period saw limited regulatory activity in the telecommunications sector. An area of interest has been trans-Tasman roaming prices. Vodafone made significant reductions in the overall cost of roaming to Australia and around the world with the launch of DataAngel overseas in November 2012 prior to a decision by the New Zealand and Australian Government's to monitor trans-Tasman roaming rates. We expect the monitoring to highlight the value Vodafone New Zealand customers enjoy on both sides of the Tasman.

Direct economic impacts (millions)

  2013 2012
Revenue $1501.5 $1618.7
Operating costs $442.8 $455
Employee benefits $178 $163.5
Donations $1.05 $1.7
Tax paid $64.4 $64.9