Quad-play battle starts: VodafoneZiggo matches KPN

Friday 21 April 2017 | 13:16 CET | Market Commentary
VodafoneZiggo launched at the start of this month its new offer for quad-play households taking Ziggo (fixed) and Vodafone (mobile) services at the same address. The 'non-stop extras' offer is similar to the advantages offered by KPN Compleet and is aimed mainly at reducing churn among mobile customers. Given its heavy debt load and ambitious revenue targets, the joint venture will also need to attract new customers to meet its goals. The current offer seems aimed mainly at attracting customers with higher-end mobile data plans. Players without their own quad-play offer also targeting this segment, such as T-Mobile and Tele2, may find it more difficult to compete going forward. 

Ziggo customers who also take a mobile subscription from Vodafone receive double the standard amount of mobile data and those taking a Vodafone Smart, Red or Black plan also receive a discount of EUR 5 per month. The discount was not part of the original offer but was added after a Vodafone stopped a 50 percent off promotion. Vodafone customers who have a TV subscription at Ziggo can also choose an extra channels package and receive the security package Safe Online XL free.

The offer is designed to reduce churn among mainly mobile customers. The joint venture has started with a high amount of debt, as analysed previously by Telecompaper. It's targeting both significant cost savings and revenue synergies. The latter should come from cross- and upselling and price increases, but this is all happening in a very competitive market. The first step is to expand the overlap in the two companies' customer bases. An estimated 20 percent of Vodafone customers already have a triple-play at Ziggo, equal to just 800,000 customers (20% of the 3.8 million Vodafone postpaid customers). 

The company is taking a pro-active approach to increase fixed-mobile bundling: from 03 April the non-stop extras will be activate automatically for customers who qualify. Customers need to have a subscription with digital TV and broadband (>30 Mbps) from Ziggo as well as a Vodafone Start, Smart, Red or Black subscription. The question is whether this offer from VodafoneZiggo can also attract new customers. 

The new quad-play offer from VodafoneZiggo is very similar to KPN. KPN offers quad-play customers also a EUR 5 discount, double data and an extra TV package. In addition, KPN doubles the minutes and SMS in the mobile plans and allows sharing of mobile data and free calls between accounts at the same address, an appealing feature for families. 

VodafoneZiggo is focusing on customers with bigger bundles. Customers with a cheaper Start mobile plan (up to 1 GB, 150 minutes) do not receive any extra minutes or the EUR 5 discount, but they would do so at KPN. Vodafone has a much narrower low-end range of plans, with five plans without unlimited calls. VodafoneZiggo's new offer will intensify competition further at the high end of the market for big data bundles, an area already under attack by T-Mobile's unlimited plans. Both T-Mobile and Tele2, which recently increased the size of its bundles, will find it more difficult without introducing their own specific (quad-play) offers. For example, 10 GB plus 100 minutes a month costs EUR 22 at Tele2, but only around EUR 18 at VodafoneZiggo. 

VodafoneZiggo's quad-play offer clearly aims to match KPN, which has been very successful in reducing churn. VodafoneZiggo is also aiming to improve its results by attracting more customers in the high-value segment. While KPN customers are unlikely to jump ship quickly given the similar advantages, VodafoneZiggo may find more interest among T-Mobile and Tele2 customers. 

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