8 Aug 2012

2degrees sets sights on next million customers

1:30 pm on 8 August 2012

After winning a million customers in its first three years in the market, the mobile phone provider 2degrees is aiming to sign up to a million more by driving down prices further.

The company was launched three years ago as a competitor to Telecom and Vodafone, investing $450 million in a network and services.

But while it now has 25% market share, revenues are only about 10%, because of the low prices.

Chief executive Eric Hertz says the company can sustain the low prices and will continue to be a low-cost operation.

"Quite frankly the prices were extraordinarily high," he says. "The profits and the margins of the existing players were very, very high."

Mr Hertz says the next targets are sustainable growth and profitability, as well as returning profit to investors within the next couple of years.

He says he believes the Kiwi dollar's value will begin to approach what's being seen in Asia and North America as competition increases.

"If you look at what it did over the last three years, it's come down across the board around 30%. There's no reason to believe that won't continue to go down over the next two, three years."

Mr Hertz says the company plans to reinvest up to $90 million from earnings in the next year in new sites and innovations.

2degrees' main shareholders are the US-based mobile communications specialists Trilogy International Partners, the Hautaki Trust, Communication Venture Partners and KLR Holdings.