Vocus' next target: Telstra and Optus' customers

By

Win one battle, onto the next.

It's been likened to a David and Goliath battle - two small ISPs fighting tooth and nail to fend off attacks by TPG's Goliath in an effort to create a new company that would significantly shake up the Australian telco market.

Vocus' next target: Telstra and Optus' customers
James Spenceley

Vocus and Amcom were prepared to do whatever it took to get the merger through to completion.

It wasn't an easy road. TPG slowly and incrementally increased its share in Amcom to a 19.9 percent blocking stake - enough to scuttle the merger.

On paper, TPG had the winning hand, and for a while it looked as though the move would be successful.

But luckily for the pair, TPG's aggressive approach didn't sit well with Amcom shareholders.

They retaliated when backed into a corner and, in a never-before-seen result, turned up in droves to support the merger.

Now, Australia has a new telco worth a combined $1.2 billion and boasting an impressive horde of assets.

TPG won't have long to lick its wounds, though - according to Vocus CEO James Spenceley, the company's next target is scooping up the customers of Australia's top providers of business internet services.

Line of sight

Excluding Telstra and Optus, for a long time AAPT was the gold standard of corporate telecommunications in Australia.

Macquarie Telecom stuck its head above the rest for a number of years, and TPG is popular among the mid-market despite its strong retail focus.

But according to Spenceley, there's no current provider that stands out as number one.

It's a spot Vocus is gunning for.

"We want to become the default choice for corporate telecommunications in Australia. At the moment, I don't think there is one," he said.

"Telstra and Optus are the guys that have all the business. We just need to steal it from them."

The Amcom merger creates a telco with around 7400km of fibre and more than 20 data centres across Australia and New Zealand. 

However, infrastructure fire power is not the issue - the problem Spenceley faces is that Vocus is not a household name.

But from his point of view, it's not a challenge, it's an opportunity: a honeypot.

"They've got massive black books. They've got a lot that's strong about their business, but we are smaller and more nimble."

He's planning to embark on a brand awareness campaign to bring more attention to Vocus.

It started with a cheeky dig at TPG in newspapers and news sites and now includes a new website.

"People may not have heard of us, but as soon as they look around, they see we've got the credibility," he said.

"You find out all of these household names - tv channels, sporting shows - depend on us and travel across our fibre optic network.

"People get very comfortable very quickly with us. It's just about increasing our brand awareness. You'll see us do a lot more marketing now to get that out there." 

Will it work?

Telco analyst Paul Budde thinks Vocus' infrastructure will be its winning hand.

 "You can have this ambition, but if you don't have the assets it's a challenge to attack Telstra and Optus. I think that the infrastructure is there, but it's far more important that they've got a business model," he said.
 
"They're far more mobile in their approach, they come from a dedicated IT business background, so they are well positioned to address that market."
 
But in reality, Budde said, when looking at the total scale, Vocus will still be a "fly on the big pie of Telstra".
 
"I'm pretty sure Vocus can win some business there, but in all reality, Telstra and Optus - particularly Telstra - are dominant in that market, and that will always be the case. It's highly unlikely that more than a dent in the business is what they can achieve," he said.
 
Where Vocus could be successful, according to Budde, is in value-add and redundancy services.
 
"If you are AMP, Westpac or whoever, they will always use Telstra because it offers a solid, reliable, risk-free service," he said.
 
"What Vocus should start looking at is what kind of special services can they offer, what sort of redundancy do they have? No-one wants to rely on one company totally.
 
"And I think that's where they can score: value-added and redundancy services, and just being mean, lean and eager."
Got a news tip for our journalists? Share it with us anonymously here.
Copyright © iTnews.com.au . All rights reserved.
Tags:

Most Read Articles

Telstra customers' details included in leaked data file

Telstra customers' details included in leaked data file

NBN HFC users can expect a speed boost from May 1

NBN HFC users can expect a speed boost from May 1

TPG Telecom is uplifting its data estate

TPG Telecom is uplifting its data estate

3G shutdown to affect more customers' access to Triple Zero

3G shutdown to affect more customers' access to Triple Zero

Log In

  |  Forgot your password?