Vodafone IPO

[GTM 3442]

I suppose that's one way of getting rid of them! And cheaper than training.

My experience with Vodafone was that they had very good, very capable, people, who wanted to do a good job, and to do the right thing by the customer and the company, but that those good, capable people were hamstrung by truly dreadful internal systems, processes, and procedures.

Some of the sues seem to have been related to growth by acquisition, and the need to maintain various legacy systems.

However, whatever the cause, they eventually they paid me what I wanted, after which I left and moved to another company.

[Balance]

https://www.nzherald.co.nz/business/...ectid=12211374

The Pig is being given a major makeover and dress up - you have been WARNED!

[Marilyn Munroe]

Have they integrated the Bell South / Telstra-Clear billing system yet?

Boop boop de do
Marilyn

[winner69]

Vodafone had tens of thousands of disgruntled customers on Saturday

Underinvestment in critical infrastructure caused the problem social media says

[Balance]

Vodafone had tens of thousands of disgruntled customers on Saturday

Underinvestment in critical infrastructure caused the problem social media says

No reason for them to invest when they are wanting to sell - unfortunately NZers are suckers so they will get away with it too!

https://www.nzherald.co.nz/business/...ectid=12211416

Meanwhile, they are looking to shift jobs to India (every dollar saved = $15 extra for Vodafone in IPO value).

[blackcap]

No reason for them to invest when they are wanting to sell - unfortunately NZers are suckers so they will get away with it too!

https://www.nzherald.co.nz/business/...ectid=12211416

Meanwhile, they are looking to shift jobs to India (every dollar saved = $15 extra for Vodafone in IPO value).

I was on the phone with vodafone last week to sort out an issue with sim cards on my account. What a nightmare. Seriously took about 45 minutes to sort out a cancellation of an extra 2 sims I had on my account. Could not do it at the local store, had to go through the 0800 number. For that alone I am going to ditch them at the next opportunity. It was horrible. The first lady (from phillipines or india) could sort out the cancellation but then could not tell me my outstanding balance and had to be transferred to another department. More waiting etc etc, and got transferred again. I cannot believe that a company of their supposed calibre would want their customers getting so pissed off.

[stoploss]

inside goss. Apparently IFT in talks to buy Vodafone.

Not that inside when it's already in the AFR ......

[silu]

Not that inside when it's already in the AFR ......

i know i know i've deleted my post.

[Snoopy]

https://www.nzherald.co.nz/business/...ectid=12211374

The Pig is being given a major makeover and dress up - you have been WARNED!

Five years down the track and no IPO as yet. But current 'One NZ' (as it is now) CEO Jason Paris has some ideas on how he can make it work better. Perhaps there are lessons here for other Telcos too?

https://www.nzherald.co.nz/business/...GV3DGKEK6ZCUU/

Headline quote:
"They (the multinational techs like Microsoft and Amazon) are getting margins off our infrastructure. 4G and 5G invested in by us, to give them the speed and the latency that their applications are enjoying. We are providing 'business class' for economy pricing, and that is not sustainable."

'One' is now facing its own threats: Higher wholesale input prices, losing margin to major tech players, and customers demanding better service at lower prices. It means the incumbants of a 3 player oligopoly are having to innovate at a pace unlike ever before. Their ownership structures may differ. Spark is publicly listed, 2 degrees is privately held and 'One' is owned by listed private equity outfit Infratil. But ultimately they are all trying to win in an increasingly difficult market.

Interview is with the Herald's Madison Reidy.

MR: "People and business are doing it tough. How bad is it out there?"

JP: "Pretty messy. We saw some of the trends early. First of all around bad debts. We have our highest bad debts in 17 years at the moment. And that is just with customers struggling to pay. you can imagine the devices that customers are buying are more and more expensive now. A lot of the time they are paying them off interest free over a period of time, and we have seen customers struggling a bit. We nurse them through that like other industries are, and then we started to see businesses tighten their belts, deferring those big IT programs of work by 6 to 12 months. Then we have seen the wave of restructures coming through in every industry, including the government, and public sector, which we have a pretty large market share in. Those are the two headwinds that we have seen (consumer and business) and the next twelve months looks like it will continue to be more of the same with conservative investment, homes being hit in the pocket. Down at the moment in Invercargill (JPs home town) , talking to SBS bank, quite a large percentage of their customers are rolling off a sub 3% interest rate, moving to six or seven this year. So they are also working and scrambling to make sure they help their customers navigate through that as well. But it doesn't matter what industry or who you are, you are finding it much more difficult."

MR: "How big is that bad debt scale and how much do you have to provision for a potential work through of it?"

JP "It is in the millions. It's significant and it's a challenge for us. You don't like surprises in any year that you struggle to negate. But we are lucky that we have hit the middle of our guidance. I know others haven't been as successful. But looking ahead it is still going to be a pretty challenging economic environment for all businesses and all industries."

MR: "You are private equity owned and have been for a while. Can you take me back to what your initial thoughts were when private equity started buying up One NZ, and what your thoughst are now that you have had a bit of time with them?"

JP "I was about a week into the job and I got told to get on a plane fly to Singapore and meet the potential new owners who had just agreed a price with Vodafone group. Fast forward I have been here five years so you can tell we got on pretty well. And look PE has been phenomenal. I have worked in government owned, publicly listed and PE owned structures."

MR "Can you rank them 1-3?

JP ":I think PE is number 1 for me, purely because they are always looking at long term value creation. And even when one of their businesses might be in challenging economic times, they have normally got their bets spread, where they can redeploy capital across industries and across businesses to where the opportunities lie. Often with PE, their biggest opportunities is in these environments, because they can continue to invest wisely. And those companies that continue to invest come out the other side of a challenging economic environment, much stronger than those that are a bit more tentative and conservative. Infratil and Morrison? Amazing owners. I love their purpose which is investing wisely in ideas that matter. So that's a long term view on the industries they are invested in and we are benefitting."

MR "One of the reasons that PE owned companies thrive is that it is no secret that PE owners drive operational efficiency. How has your PE owner changed the operations of OneNZ? What are we talking in terms of restructures and offshoring?"

JP "My PE owners start with 'Be the best at what customers value the most'. Because we know that if our customers want us, we know we have got a sustainable business. And so it has been a pretty simple strategy: Network, service, product, pricing. That has been the last five years of this organisation's life: Investing in all four of those areas. That is a great thing, as opposed to the Vodafone group that wanted to consolidate more into Europe and Africa, and Vodafone were investing less in Australia and New Zealand. We have now been able to deploy the capital to significantly improve the performance of the product. Clearly Infratil want a return on that. We have got tail winds in Infrastructure with our mobile towers deal. Our investors doubled their money. And a good deal for Spark investors, a good deal for MacQuarie who owns 2 degrees. So the industry has benefitted from a rising tide. Then there is a lot of operational efficiency we will be able to gain here just through running the business better. Like service improvement. We are the only Telco that publishes our service results every single day, because we are so proud of them (yet we know we have got a long way to go). But that reflects on a lot of cost to operate because if we have fewer customers calling us, if they do need help, it means we sort it first time, it means are products are better designed, it means our experiences are more digital. All of those things benefit our customers and also benefit our owners at the same time. I can genuinely say to you that I have never felt at any point in time in the five years that my owners have asked me to do something that isn't in the best interests of our customers. Which is a great position to be in when you are PE owned."'

MR: "On service, how would you rate it currently, out of ten?

JP: "Six, for our ambition. But as I said before I think we are if not the best, up there with the best now, because we are publishing transparently our results. So I would give our industry a six out of ten. I don't think we cover ourselves in glory in New Zealand or internationally for Telcos being seen as this bastion of customer experience excellence. But we should be. You know, if I say to the team, when was the last time you called Netflix? We are a digital subscription business. Why are people having to call us to get advice or whatever because they have got an issue? It shouldn't be happening."



SNOOPY

[Snoopy]

To help afford improvements in service, the type of infrastructure Telcos own has been shifting. 'One' and Spark both sold hundreds of cellphone sites nationwide in 2022. This is the physical poles, in deals to offshore investors worth about a billion dollars each. Usage of the active part of the network that they still own has been climbing, with data usage up by 23% in the past financial year. 'One' just spent $70m in building and upgrading more than 300 of those active mobile sites. The tech behemoths are set to benefit from that: Amazon Web Services, Microsoft Azure, and Google Cloud. Their data centres store information an asset that is increasing thanks to the investment in 4G and 5G. Their revenue has sky rocketed compared to revenues in Telcos globally over the last four years. For that reason they are an investor favourite, with the market caps of Alphabet, Amazon, Microsoft and others leaving Telcos in the dust. But their relationship is also symbiotic. For example 'One' is using AWS to build its own internal AI models. But should Telcos have to foot the bill alone for the next infrastructure investment? And how awkward would that conversation with the big tech giants be?

The Madison Reidy interview with One NZ CEO Jason Paris continues.

MR: "Can you explain to me how the scale and influence of these big tech companies, aka the hyperscalers, are changing the telecommunications industry currently?

JP: "They have done an amazing job of monetising demand. compared to the telecommunications industry in New Zealand and globally. if you look at the advancements that have happened in devices, we are paying a lot more for those devices now. If you look at the hyperscale applications that they have launched: video calling, or migrating your data to the cloud, those consumption charges mean we are paying a lot more now. the Telcos, we have built the infrastructure that those devices and those applications use. A 30% increase in the use of our infrastructure every single year. Our prices are not going up I can tell you that 30% every single year. We have as an industry, not done a great job on monetising demand. That is our issue. But because there is more demand, driven by the device manufacturers and driven by the application providers, we are seeing an increase in cost for us, that they are benefitting from."

MR: "So they are crushing you on margins?"

JP: "They are making the margin off our infrastructure, and loving it along the way. Because we are investing in 4G. We are investing in 5G. The speed and the lower latency that their applications are enjoying, we are definitely not charging more for. And so it is a really interesting time for our industry going forwards. We have just spent hundreds of millions of dollars upgrading to 5G. the usae cases haven't been there for us to monetise. But they have been on 4g and 5G for the application providers. So that is a challenge for us. One of the ways we think that we can do a better job looking at our own backyard first is by unbundling our services more transparently. We look at other industries that we think have done it quite well...."

MR: "....Like Air New Zealand for example...."

JP: "Yes, perfect example, 'seats to suit'. At the moment we are providing 'business class' for economy pricing. And that is not sustainable. But if you just go to a customer who was previously paying economy and say you are now being charged business, that is not acceptable either. What I love about the airline industry is that they have unbundled it. So if you want just a seat you get this. If you want food you get this. If you want entertainment you get this. If you want a better seat you get this. If you want priority boarding you get this. I think that is a very interesting construct that the Telco industry and ourselves can learn from, and should be investing in: That quality of service, unbundling and delayering. The other thing that it does is that it shows our customers there is actually a cost to us to provide that service, that we have been hiding from you for quite some time. There is a value exchange..... "

MR: "....The cost of this to these hyper scalers is so much lower....."

JP: "Correct. And then you have got the other analogy, which is we are kind of providing a highway. We have just been successful in acquiring the 'Dense Air' spectrum. It is like another lane in the highway. But it wasn't free. It is tens of millions of dollars we have been investing to get this other lane on the highway. And again there should be value exchange. It shouldn't just be that he application providers can just go 'Thanks very much I will just take that for free and monetise that demand'. When you are building a highway there is normally some form of road user charge...."

MR: "...or a toll road....."

JP: "Or a toll road, whatever it ends up being. i think those are interesting themes that we need to consider, because the sustainability of our entire industry is reliant on the quality of the infrastructure that those applications and devices are connected to. And in a country the size of New Zealand, where we are challenged by our population, you want to make sure that you can continue to invest in the next generation of digital connectivity as it comes along, so we can run the best businesses from New Zealand, and expand and connect globally, because we have got digital infrastructure here that is world class. i think we did that really well with fibre. We need to to the same thing with 5G, 6G , 7G"

MR: "For 6G then, this is a David verses Goliath story. You are not Goliath in this one. So what, do you call Google Cloud, Microsoft Azure, Amazon Web Services and say 'You pay for 6G'?

JP: "Well first of all we talk to our vendors and say what are the usage cases? What are the ways that you think that we can monetise this next wave of technology which is inevitably going to cost us hundreds of millions of dollars? I don't know whether that is through the hyperscalers or the application providers, or the device manufacturers. All I know is that it can't be us wearing all of the cost and others always benefitting from it for the next ten or twenty years. Something has got to change. And the first place we always look at when something has got change change? What do we need to do better? We do a better job on what we can control verses other things that are maybe outside of our hands."

MR: "The next wave of technology is artificial intelligence, perhaps according to some even AGI 'Artificial General Intelligence'. What's your view on that? Do you think we are heading for AGI? And if so when?"

JP: "I think we are. I think you have just got that next stage of generative AI coming through where smarter people than me threw a whole bunch of data and computing power at existing applications and were surprised at the quality of the answers that came back."

MR: "Have you used Chat GPT4.0 that came out this week?"

JP: "I have tried to. I have got Chat GPT. But the 4.0 I think is being nursed through the different markets to get all of those amazing use cases that I have seen which are being hyped up on launch. So I will definitely be an early adopter of that technology because I think it is a game changer. My view on artificial intelligence is not necessarily that your entire role will be removed. But there are hours of your week which are not as productive as you would like them to be, or that you just hate. Wouldn't it be cool to throw a robot at that and 'make it easier' or 'remove that'? So I'm telling my kids, I am telling my team. It is not necessarily AI that will take your job. But someone who knows AI better than you will. So the best way to make sure it doesn't happen is to 'lean in' and to use this technology. So I think Generative AI: It is not just something that can benefit businesses of our scale. Anyone can think about generative AI, in terms of using imaging to survey your infrastructure or land, to create job descriptions, to create presentations, to take notes of your meetings, to summarize contracts for you.....These are things that any business, whether you have got five people or five thousand people. You are probably spending too many hours 'on it', and AI can help.



(to be continued)