Economic thermostat up 2degrees

2degrees chief executive Eric Hertz keeps things competitive. Photo supplied.
2degrees chief executive Eric Hertz keeps things competitive. Photo supplied.
There is no doubt that 2degrees has influenced New Zealand's mobile market from its quirky advertisements to its low-rate calling and texting plans. Business editor Dene Mackenzie reviews a report put out by 2degrees on its contribution to the New Zealand economy.

Mobile technology company 2degrees is never backward about its achievements in the market and a report commissioned by the company is another example of taking the high ground in the competitive mobile environment.

Venture Consulting was hired by 2degrees to analyse what the company had contributed to the economy and found that the contribution had so far been $2.24 billion.

If that seems a lot, then an inside table shows that direct investment between 2007 and 2011 was $580.3 million, indirect investment was put at $297.7 million and a competition dividend was rated at $1.36 million, to give the total of $2.4 billion.

Between 2011 and 2021, 2degrees is expected to contribute another $7.8 billion to the economy through $4.7 billion of direct investment and $3.1 billion of indirect investment. No competition dividend exists in the period.

Direct investment is described as both capital and reinvested revenue. Indirect investment comes through the support of New Zealand businesses and competition dividend represents the savings delivered to all New Zealand mobile consumers through lower mobile voice pricing as a result of competition.

2degrees chief executive Eric Hertz says that since launching two years ago, it had been 2degrees' mission to change the New Zealand market for good.

"While 2degrees has grown quickly and made a significant investment in New Zealand, the wider impact of that investment has not been quantified until now." The report showed that the arrival of a third mobile entrant had generated benefits in several ways, he said. They included the direct investment, indirect investment and the competition dividend.

The competition dividend reflected consumer savings through lower voice pricing resulting from competition - an average saving of 21% since late 2007.

"This means all mobile users have benefited because competitors reacted to 2degrees, lowering their prices and improving offerings to compete.

"Mobile competition is off to a great start, but is still developing," he said.

The company was investing in network and retail stores along with services to new markets, Mr Hertz said.

"We intend to do our part and continue to take the game to our competitors."

For policymakers, it meant there was something tangible to build on.

"Upcoming issues such as the allocation of the digital dividend spectrum would have a large impact on the future of mobile competition, Mr Hertz said.

While 2degrees was new to the market, the struggle to provide mobile competition had been a long, tough campaign.

Hautaki Trust, the founding shareholder, deserved special recognition for its perseverance in turning Maori spectrum into the late, third-entrant national mobile operator, serving a market that was so clearly ready for choice, Mr Hertz said.

The Venture report identified that 2degrees had directly supported the creation of 574 full-time equivalent jobs since 2007.

It was estimated the 2degrees workforce would likely grow to a total of between 850 and 900 full-time equivalent employees by 2021.


2degrees

• 580,000 customers as at March 2011.
• 200,000 New Zealanders have ported their mobile number to 2degrees Employs more than 500 staff from more than 30 countries.
• Currently investing $100 million in network to improve performance.
• Provides pre-pay, pay monthly and mobile broadband services to customers and businesses.
• Building a national retail store network with more than 30 retail stores to be open by the end of the year.
• New Zealand-based customer care.

 

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