Ask the average Kiwi to list the top three internet service providers in New Zealand and chances are they will nail the top two – Spark and Vodafone. But when it comes to the number three player, there is a strong possibility they will not only be wrong but they won’t even recognise the name: Vocus Communications.

Vocus is one of a strange breed of large companies whose brands are better known than their company name. Think Yum! Brands, the US$11 billion (NZ$15.3 billion) restaurant company, with 37,000 Pizza Hut, Taco Bell, KFC and other restaurants in 110 countries. Then there is the Altria Group, the US$17 billion ($23.7 billion) name behind Marlboro cigarettes.

Vocus is a Sydney-based telecommunications company whose New Zealand brands include some of our best-known ISPs – Slingshot, Orcon, Flip and Maxnet on the residential side; 2Talk and CallPlus for business. It has 22 data centres and 4,200km of fibre in the ground this side of the Tasman and 700-plus New Zealand employees.

It also has hardly any profile.

The company began life in 2008 as an Australian B2B telco provider, and over the last couple of years has grown exponentially through some major acquisitions. These days it has a market capitalisation of $A3.5 billion (NZ$3.7 billion) on the ASX and is the fourth largest Australian telco, with 28,000 kilometres of fibre in the ground across Australasia. It deals with more than 500 content partners.

The two acquisitions that had the most impact in New Zealand were the $115.8 million purchase of New Zealand fibre-optic cable network operator FX Networks, in 2014. This gave Vocus access to government, business and ISP clients in New Zealand. Then, in December 2015, came a A$3.8 billion merger with fellow Aussie telco, M2. The M2 deal significantly bolstered Vocus’ residential broadband presence in New Zealand, because M2 had, in turn, bought New Zealand’s CallPlus (with its brands Slingshot, Orcon, Flip and 2Talk) earlier, in April 2013.

These acquisitions mean Vocus NZ now has a 14 percent share of the home broadband market. Its New Zealand chief executive Mark Callander (on his third set of business cards in 18 months, after heading – in quick succession -– CallPlus, M2 and now Vocus) aims to lift that to 25 percent. He believes this is achievable over the next five years.

“Our ambitions are to connect one in four Kiwi homes and businesses, whether it’s through our retail brands or our wholesale partnerships. And we are heading in the right direction. M2 and Vocus are good at acquisition, and the Kiwi brands have been good at organic growth. This is now translating into Vocus being a credible alternative to the big guys.”

So, what’s out there to buy? Spark, Vocus and Vodafone between them arguably account for 90 percent of the broadband market, but there are plenty of small ISPs in the other 10 percent Vocus could potentially buy, says Australian telco commentator Grahame Lynch, publisher of CommsDay.



Meanwhile, as an aggressive number three player, Vocus will also be looking to snaffle customers from Spark and Vodafone. Commerce Commission figures show Vocus’ “qualified revenue” (the measure ComCom uses to determine the development levy –
see table) rose nine percent in the year to 30 June 2016. By contrast, revenue at Spark and Vodafone fell slightly.

One thing Vocus does lack is a grunty mobile proposition. Earlier this year industry rumours suggested the Australian company might be a suitor for New Zealand’s third largest mobile player, 2degrees, which has 23 percent of the mobile market but accumulated losses of almost NZ$400 million. Nothing came of any discussions, if indeed they actually happened. Lynch says a deal “isn’t on the cards as such, but is possible.” Callander isn’t commenting, except to say, “This is the telco market, so there are always rumours.”

Still, he admits that right now “mobile is hard work. It’s a massively competitive market, and it’s tough to compete without your own network.”


“Telco moves so fast you need to be constantly scanning the horizon and ready to move in a new direction. You need to build a great team, and trust in that team.”

Mark Callander, CEO, Vocus NZ

Instead, Vocus has negotiated a mobile virtual network operator (MVNO) agreement with Spark, although “the MNVO market has some challenges”, says Callander. The company does offer mobile plans, and about 15 percent of new Slingshot broadband sign-ups bring their mobile business with them, he says.

He reckons a 25 percent market share is possible without mobile. But, in the meantime, the company is fighting for change to give fuller and more flexible access to telcos without a network.

Don’t write that ambition off. They might just get what they want, says Craig Young, chief executive of the Telecommunications Users Association of NZ (TUANZ). CallPlus, under Callander’s leadership, had a reputation for creating edgy brands that disrupted the market. Various CallPlus brands were pioneers in introducing unlimited data and calling packs. And it was CallPlus that challenged the big media players’ blocking of international content, by introducing the ‘Global Mode’ bypass option. The company was also a strong force in the decade-long fight to unbundle the local loop.

“Vocus is an important player in the New Zealand market, and has been a successful challenger,” says Young. “New Zealand is a hard market, with two larger players and a long tail of smaller ISPs, which is not uncommon around the world. But we need that competitive tension. We need people to take on the big players. Vocus has that desire.”

Still troublesome

Callander says being bought by Vocus hasn’t affected the company’s ability to be troublesome – rather the reverse. “Our increased size has grown our ability to disrupt.”

And it’s not just on the retail side, says Callander. While Vocus’ domestic broadband brands are more conspicuous in the market than the government and business sides of their business, the latter two bring in just under half of the company’s revenue.

“Each of my business units has targets and the resources to grow. There’s no favouring one business unit over another – in fact, focusing on a range of sectors is a strength of the business.”

He says the New Zealand arm is “pretty autonomous” and that won’t change in the foreseeable future. Nor does he plan to abandon the company’s suite of brands in the retail and business markets, although he wants to increase the profile of the Vocus name, particularly as a recruitment tool.

The Australian company’s values (see below), which can only be described as unconventional, are part of the plan to attract and retain staff in the business, and promote Vocus in the industry.

“Don’t be a dickhead”, “Don’t screw the customer”, “Have a crack” and “Clever company. No muppets” are all values, and they are designed to encourage staff to be disruptive – in a good way, says Callander.

“They are quite stark and they change how you deal with the customer. We want to be a company that believes firmly in winning but doesn’t work like other companies. We want people who will do what’s necessary to push the rules and boundaries to get to market quickly, but who are going to be accountable and aren’t going to pass the buck when it comes to the customer,” says Callander.



Just as The Download went to press, Vocus became the first New Zealand telco to buy an energy company. Vocus NZ chief executive Mark Callander said its Slingshot brand would start offering customers broadband, landline, mobile, gas and electricity services on the same bill from early next year.

Whether Vocus succeeds in taking on the likes of Spark and Vodafone is anyone’s guess – it’s a big ask. But talking to Callander has weird strains of interviews with senior All Blacks figures of recent years. Does Callander aspire to be the Richie McCaw of the telco industry, pushing the limits of the rules of the game to take on – and even beat – far bigger players?

Although Callander baulks at comparing himself with the former All Blacks rugby captain, his rules of engagement sound just a bit All Black-esque.

“The key to winning is always understanding the rules of the game and using them to your advantage. There’s a real element of competition to it, and it doesn’t always go your way. But how you respond in these situations is most important.

“Telco moves so fast you need to be constantly scanning the horizon and ready to move in a new direction. You need to build a great team, and trust in that team. You need to show them what success looks like and empower them to go after it. You need them to truly believe in what you are trying to achieve across the company, and their values need to align with this, otherwise there is no passion to deliver the best for customers.

“And you simply have to want to win.”

Heard that anywhere before?