Telecom vs Telecom as new mobile price war breaks out

Telecom's mobile market share loss is customers' gain with a new mobile price war breaking out.

Last week I mused that Telecom's budget brand, Skinny, was being marginalised as its parent introduced the Telecom Big Value Pack, which costs $19 a month (for 60 voice minutes, 5000 texts and 500MB of data).

Telecom is lookiing to win back share in the pre-pay market after losing another 32,000 customers in that area in its most recently reported half year, to June 30 (that is, before it's big "mobile reset" to 1.57 million customers caused by the fact only 68,000 of its 640,000 remaining CDMA customers migrated to XT between February and its July 31 shutdown).

This week, Skinny has hit back with $4-a-week plan that provides 60 calling calling minutes, 60MB of data and 60 txts.

2degrees waded late last week with its own $19 pre-play plans, including one that's a close mirror of Telecom's with 60 voice minutes, 5000 texts and 500MB of data

And now Vodafone's just refreshed its own $19 pre-play plan to offer the same.

At the other end of the market, it's great to see Telecom offering a rebate of $1000 or more for those who sign to a 24-month contract plan (see Telecom.co.nz/business). Previously, Telecom has offered an $800 rebate to lure big-spending smartphone users.

Don't get too excited about that figure until you see the size of the break-fee from your current provider - and of course do play telcos off against each other and give your incumbent phone company a chance to sharpen its pricing to keep your business.

Good times.

 New Telecom plans stray into Skinny territory

Wed Aug 22: Last night, Telecom revealed a new cellphone plan (see release below) that seems to stray firmly into the budget territory occupied by its troubled Skinny brand.

Skinny boss Paul Taylor disagreed with NBR's analysis. Mr Taylor was head of mobile marketing for Telecom before moving across to head fully-owned subsidiary Skinny in July.

He told NBR he was fully aware of the new "Big Value Pack" plan; he was still on Telecom's team when it was developed.

He said this morning that the new plan was "a value play. But two thirds of the New Zealand market is value." (The other third is on contract plans).

Mr Taylor said the $19-a-month Big Value Pack price point was aimed at 2degrees and Vodafone.

Skinny, by contrast, still as the youth budget market in its sights with its $4-a-week deals.

$4 a week, of course, adds up neigh on $19 a month.

But Mr Taylor says youth "get paid week, and live weekly."

Telecom's value plan, by contast, would appeal to couples and families who think monthly.

Beyond it's pay-weekly option, Mr Taylor said Skinny was the only mobile brand offering a $5 top up; a "call me back" feature for people out of credit who still wanted to reach their friends; and the option to transfer $10 phone credit to a broke friend.

The Skinny boss told NBR "the tide is turning" in terms of brand perception and social media feedback, but declined to give any sales numbers (Telecom has promised commentary on Skinny at its half-year result on Friday).

Skinny, launched in January, has recently seen a change at the top, abrupt changes in the tone of its advertising and the resignation of its patron, Telecom Retail chief executive Alan Gourdie amid rumours of slow sales.

The new plan will be heavily promoted over the next month, the company says.

All eyes will be on Telecom's full-year result, Friday morning, when it has promised to reveal Skinny's numbers.

Telecom is still on the backfoot in mobile. At its last half-year update, in February, the carrier said it had lost a net 180,000 mobile customers.

2degrees recently claimed 1 million mobile customers.