Steve Koerber's Old Blog

Remuera's house sold name since 1998 – 021864166

Telecom versus Vodafone

Posted by Steve Koerber on April 14, 2010

I stumbled upon a news article today stating that Telecom’s forecast earnings have been significantly reduced.  No doubt this will shake investor confidence and make many question the future value of the company.  The share price will suffer accordingly.  Telecom is also in the process of cutting staff to reduce costs and improve efficiency.

I’ve been privy to a noticeable dominance of Vodafone in the mobile market.  I run lots of open homes and ask every visitor for their phone number.  Fully 90% of people who visit my open homes have vodafone (021) numbers.  It’s quite incredible when I look over my hundreds of lists.  It’s not unusual to have 20 visitors in a row with 021 numbers.  While I realise that these days you can use the 021 prefix with Telecom, I am sure that Vodafone still holds a significant market leadership position in the mobile market.

Which brings me to question the future of Telecom and its business as a whole.  More and more people (especially generations X and Y) will never own a fixed phone line/number.  The way of the future is mobile numbers/devices.  Granted Telecom has huge investments and interests in areas other than mobile, but in the minds of consumers mobile leads the way and is key in customer satisfaction and branding.  With such a strong position in the youthful mobile market already, surely Vodafone will be the dominant telco in NZ for a long time. 

While I’m obviously not giving investment advice, based on my rather crude and simple observations, I’m simply expressing an opinion as to where my money would be if I was investing in telcos long term.

Anyone care to argue the point?


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