Kogan to enter the NZ mobile market

Published on the 08/06/2018 | Written by Pat Pilcher


Kogan_Vodafone_MVNO

Will the Aussie e-commerce disruptor deliver cheaper mobile?

Australian telco and consumer electronics retailer, Kogan.com announced they’re launching a mobile offering in the New Zealand market via a partnership with Vodafone New Zealand. This will see Kogan setting up as a mobile virtual network operator (MVNO). Under the deal Kogan will re-sell Vodafone’s mobile network under the Kogan Brand.

New Zealand, however, is not a new market for Kogan which has had operations in NZ for some time, having taken over the online business of defunct retailer Dick Smith Electronics after it ceased trading in 2016, and also operating an A/NZ version of the website with free delivery for many products to NZ customers.

The move comes after Kogan Mobile established their brand in the Australian telco market via a similar MVNO partnership with Vodafone Australia in 2015. While Kogan has yet to reveal any mobile plans for the New Zealand market, several features are anticipated.

Based on their Australian operations it is probable that they will diversify beyond mobile. In June 2017, Kogan announced they were reselling the Australian National Broadband Network (NBN) services.

Selling broadband/landline and mobile services makes considerable sense for Kogan in the New Zealand market. Doing so would give Kogan competitive parity against existing Kiwi MVNO’s such as Orcon, CallPlus and SlingShot, all of whom already resell UFB/broadband and landline services. Developing mobile and landline/broadband bundles would in theory also lessen Kogan’s need to compete on solely price.

“Skinny won’t be beaten on price, Spark won’t be beaten on value.”

Unlike most MVNO’s operating in New Zealand, Kogan brings considerable scale. Kogan (ASX: KGN) generated AU$210 million revenue for the six months ended December 31, from 1.2 million active customers.

IDC’s telecommunications analyst, Shane Minogue says that while Kogan are likely to price their offerings aggressively, they’ll also bring with them an innovative approach to pre-paid mobile;

“Kogan has had some innovative offerings in the Australian market, notably pushing a 365-day prepaid offering at the moment. Consumers can sign up and receive a low cost per gigabyte for a long-term plan. This hasn’t really been tried in New Zealand, so it could attract some consumers”

Either way, aggressive pricing by Kogan in the New Zealand market can only be good news for buyers as existing MVNO players will most likely respond in kind. This could in turn generate more competition, which is only ever going to be good news for Kiwi mobile consumers.

If Kogan do launch with a price led play and launch aggressively priced plans below what Skinny charge, it is most likely that skinny will seek to match or to beat them. Spark CEO, Simon Moutter was quoted at the Spark investor day, saying that “Skinny won’t be beaten on price, Spark won’t be beaten on value”

That said, IDCs Minogue says only a limited number of MVNO’s are likely to respond in kind with an equally aggressive price led response;

“Other MVNO players tend to compete on a niche, whether it is a business bundled solution or targeting a particular community so in terms of mass market MVNOs only Warehouse, Slingshot and Skinny really figure in the numbers.”

But will Kogan’s move into New Zealand be a profitable one? This argues Minogue, depends on prevailing market conditions;

“Aspirations for success have to be taken in line with market conditions. The MVNO market is very small in New Zealand so “success” could be in the 10s of thousands of customers. With that in mind, we have to wait and see how disruptive they are. Vocus has been an MVNO in the NZ market for quite some time (and has an Energy and Fixed offering) and their latest results showed 24,000 mobile connections by December 2017. This highlights how competitive the MVNO market is and what success can mean.”

The news coincides with an announcement that Vodafone and Vocus (owner of CallPlus and Slingshot) have plans to “unbundle” ultrafast broadband fibre from 2020. They say that this could provide for a wider range of broadband plan and service options than Chorus is currently able to offer retail operators over the fibre network.

Post a comment or question...

Your email address will not be published.

Time limit is exhausted. Please reload CAPTCHA.


Follow iStart to keep up to date with the latest news and views...



MORE NEWS: