We have danced with SkyTV, we know how it ends – Vocus

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Photo by Juliette Leufke

SkyTV may be waiting some time before it partners with a telco other than Vodafone – if the reaction from Vocus CEO Mark Callander is any indication.

When asked by Foresyte Report if he intended to speak to SkyTV about adding its content to the company’s broadband offering, Callander said no. When told that SkyTV is – in Fellet’s own words – looking for other dance partners beside Vodafone, Callander replied: “We’ve had the dance many a time.”

Following the Commerce Commission’s decision to decline the Vodafone/SkyTV merger in February, Fellet says he expected other internet retailers to call him about a possible contract, but the phone never rang.

Callander says that’s because everyone spoke to SkyTV during the merger talks, but found that nothing had changed.

“The resell agreements were widely shared as part of the SkyTV/Vodafone merger – single digit margin percentages,” Callander says. “We, like everyone else, had discussions while the merger was going on about trying to get a deal. If you can’t get a deal then, when are you ever going to get a deal?”

So, post deal, you didn’t call Fellet?

“It’s like selling a house, you’ve got to have a willing buyer and a willing seller. If one of those things don’t occur.”

Who is not wiling, because he (Fellet) says he is? Is it price? Is it the rigidity of the contracts?

“If we thought there was an opportunity we’d be speaking. It’s a dance we’ve had many times before and we know how the song ends,” says Callander.

How does the song end?

“Quietly.”

Callander also says that content doesn’t fit the current business model for Vocus, New Zealand’s third largest fixed-line telco. The company is consolidating its New Zealand consumer brands to focus on the two most prominent – Slingshot and Orcon, and has spent this year adding an energy offering to its fixed and mobile services.

According to Callander, internet providers have three “levers” for increasing their value proposition – media, mobile and energy.

Vocus has (for now) passed on media, has an MVNO deal with Spark, and it purchased Switch Utilities in December for $14 million to actively pursue energy customers. It is about the bundle – what can you add to the broadband contract to grow the ARPU (Average Revenue Per User) and retain customers.

Being an energy retailer is low margin, but bundled with broadband and mobile, it increases the overall spend of each subscriber and keeps them loyal for longer. The infrastructure to serve the energy customers – such as the contact centre and consumer apps to monitor usage – are already in place

“Broadband is the ‘pull product’, we get you into a contract and we’ll try and get you to attach mobile and energy,” he explains.

Vocus has 182,000 broadband, 21,000 mobile and 9000 energy customers. At its core, Callander says that Vocus remains focussed on broadband delivery.

“Our primary purpose in life is to make sure that when a customer goes to watch Netflix or Lightbox or whatever that they get the best network experience for their content,” he says.

“We want to be the best dumb pipe in town.”

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