Skinny launch takes rivals by surprise; NZ price war anticipated

13 Jan 2012

Skinny, the new ‘no-frills’ sub-brand owned by Telecom New Zealand, has officially launched, according to local media reports. The low-key launch, which was first rumoured in November 2011, means that Telecom now has a new ‘value’ brand to sit alongside its established 3G network, XT. Indeed, the Skinny homepage indicates an NZD4 (USD3.18) pay weekly deal – the very antithesis of Telecom’s high-ARPU-generating XT network. According to Stuff.co.nz, Skinny’s arrival has taken New Zealand’s other players by surprise, with previous price leader 2degrees – which has made strong inroads with the youth demographic since it arrived in 2009 – still claiming to offer New Zealand’s lowest pre-paid rates on its website. However, Skinny’s rate of NZD0.39 per minute for calls now undercuts 2degrees’ existing NZD0.44 per minute tariff; both operators charge NZD0.09 for text messages. Elsewhere, market leader Vodafone charges NZD0.49 per minute for calls and NZD0.12 for texts; Telecom’s Telecom Mobile arm is believed to charge the highest prices in the sector: NZD0.69 for calls and NZD0.20 for texts.

In July 2010 Telecom confirmed its intention to switch off its CDMA mobile network in mid-2012, with a view to migrating all of its customers over to its W-CDMA/HSPA-based XT network. However, in doing so, the company faces the challenge of persuading around one million ‘low value’ customers to leave its long-running CDMA network, without losing them to pre-paid price leader 2degrees, which has made solid gains since launching in August 2009. The launch of Skinny brings an end to years of speculation about Telecom’s long-desired budget brand; in May 2011, as previously reported by TeleGeography’s CommsUpdate, Telecom was rumoured to be preparing to launch budget-priced services under the ‘1 Mobile’ name, which was registered with the Intellectual Property Office in November 2010, but the plans never came to fruition.

New Zealand, Spark