Vodafone Hutchison Australia to take NBN plunge

Australian Financial Review today:

Vodafone Hutchison Australia will launch its own fixed-line services on the national broadband network now that the rollout is nearing a scale that makes sense for the telco to enter the market.

Vodafone has been mulling over whether it would enter the super-fast broadband market for some time. Industry sources said the telco had made a decision to launch NBN services and Vodafone is expected to confirm with an announcement in the coming days.

Retail services providers (RSP) Telstra, TPG, Optus and Vocus now account for close to 90 per cent of NBN connections. However, as NBN ramps up the rollout of the network into metropolitan areas, there will be an opportunity for retail services providers to take market share as consumers transfer from older technology, such as ADSL, to super-fast broadband.

There have been concerns among telcos and investors about NBN wholesale pricing after TPG warned of shrinking margins. However, Vodafone has not offered fixed-line services and does not have a margin to protect.


At present, Vodafone does not offer fixed-line services, but does offer mobile broadband.

Offering NBN services will allow Vodafone to offer bundles with mobile phone and business services, making its consumer and business subscribers much stickier, or less likely to leave to leave the telco and sign up with a competitor.

The telco, last year, relaunched its enterprise arm, and has been pushing hard in the small to medium business market. It is looking to grow its small business market share to 18 per cent by 2019.

Having NBN connections will provide a boost to the offering Vodafone takes to its business customers.

NBN, a wholesale provider and infrastructure builder, is forecasting to have 5.4 million premises ready for services, 2.3 million of those being active, by the end of 2016-17.

Vodafone Hutchison Australia chief executive Iñaki Berroeta said in August that 5 million premises ready for connection was probably a viable level for Vodafone to enter the market.


"We're investing a lot of time and effort in understanding whether this is something that we want to go in on," Mr Berroeta said.

"What we don't want is to just be another one."

NBN chief executive Bill Morrow, a former Vodafone Australia boss, is expecting more players to enter the market as the super-fast broadband network is rolled out to higher value metropolitan areas.

Vodafone previously ran a trial on the NBN network back in 2011, but did not move into a retail offering.