Vodafone head toasts New Zealand success story

By Deborah Hill Cone

Thursday 8th April 2004

The chief executive of the world's biggest wireless phone company, Vodafone, has hailed its New Zealand operation as a star performer but cautioned many factors including taxes will influence whether it would ever become a hub for the group.

In an exclusive interview with The National Business Review, Arun Sarin said he wished he could take the New Zealand company and scale it to the rest of the world. "I could say my job's done, I could retire early."

Vodafone in New Zealand had been a success story with 1.7 million customers and some of the best benchmarks in terms of brand preference.

"The organisation here has taken value-based skills a very long way further than our other companies have. I think our company here in New Zealand contributes far more than what the ordinary numbers might suggest it punches above its weight."

But pressed over whether Vodafone planned to move R&D work or other functions here, Mr Sarin said Vodafone looked at a number of factors, including the educated workforce, availability of labour and tax.

What kind of tax environment would be attractive?

Stupid question: "Low."

Mr Sarin said he looked at taxes overall, not just corporate taxes but the big picture, adding up contributions to pensions and healthcare. "I'd say New Zealand is in the zone. It's not the best and most attractive tax environment; on the other hand it's not a complete laggard either."

The local company was used to trial different technologies and was the base for the financial services for both Australia and New Zealand.

"From time to time we will bring our experiments and our operations to New Zealand. There are two or three major trials being done on behalf of the group here in New Zealand."

If the environment and incentives were right Vodafone would not be put off by New Zealand's distance from the rest of the world.

"In our business distance is not a factor. With fibre optics, and wireless, we're all in contact and communications all the time; where you are physically sitting is not a factor."

Mr Sarin addressed Vodafone staff and key business customers on a short trip to this country, his first since taking over from Sir Chris Gent as CEO of the British-based phone giant last year.

An Indian-American, Mr Sarin made his name with US-based AirTouch Communications, the cell and paging company that in 2000 became Verizon, which is 44% owned by Vodafone.

When he took over from the acquisitive Sir Chris in July last year, it was expected he would lead the firm into an era of consolidation, introducing operation efficiencies to bring together the spectacular purchases hustled by his predecessor.

But he surprised the market by making a bold bid for AT&T Wireless, reflecting Vodafone's desperation to get its brand into the vital US market. Although it has a stake in US-based Verizon, products are not offered under the Vodafone brand. Incidentally, Verizon is pronounced like horizon, not my stab at Very-zon: "That sounds like an antiseptic ointment."

His tilt at AT&T Wireless failed, but investors didn't mind many thought it was not the right fit.

Overseas commentators are picking Mr Sarin will rationalise group operations across regions, but he was careful to say the culture and marketing approach of New Zealand would stay local.

As the company moved from voice to data, audio and video services with the introduction of 3G technology, it would become more of a publishing business.

"What customers in New Zealand want is very different from the UK and the US."

Although Mr Sarin has stated he wants Vodafone to be the Coca-Cola of technology brands, he said the notion of being a global brand was more about the transportability of products and services "the content we use is local."

Vodafone New Zealand was in the process of choosing partners to build its 3G infrastructure and expected to launch in the first half of next year.

Vodafone NZ chief executive Tim Miles said the launch of 3G would have a measurable effect on the economy. "We're talking about seriously changing the way people do business."

Mr Miles said the company had been encouraged by the response to Vodafone Live, a 2.5G service, with data traffic through their network increasing 11-fold in the past year.

Mr Sarin: "What is fascinating is if you fast forward to the 3G world, [services] will be even better music will be MP3 quality, cameras will not be one megapixel but four, or eight or 12 the speeds that you go back and forth will be competing with DSL."

Despite the delays, the technological hiccups and the huge cost of buying 3G frequencies and building new networks, Vodafone is convinced 3G will be a success.

Mr Miles: "If you ask us now whether 3G is going to be successful in this market, if you're looking at the sort of graphs we are, you'd say we have to do this. I have no doubt this is going to be great platform."

Mr Sarin: "We are a company that is in an evolutionary phase. We are going from relatively basic voice products to more advanced products on the back of 3G. This time I know it's for real."

Comments from our readers

No comments yet