Kogan hones in on NBN market through Vodafone deal

Ruslan Kogan - Founder and CEO, Kogan.com

Online retailer, Kogan, is making a play in the increasingly saturated Internet service provider (ISP) market following a new deal with Vodafone Hutchison Australia.

Kogan said the deal will see it offering fixed-line National Broadband Network (NBN) in 2018 in addition to mobile and mobile broadband services.

The company signed an agreement with the telco in 2015 to re-enter the mobile market, following an unsuccessful attempt to break into the market in 2012.

After launching mobile offerings in December 2012, the company was forced to close down nine months after the collapse of its wholesale provider, ispONE.

The new agreements will also enhance the economics of the Kogan Mobile partnership for Kogan.com, the company said in a statement to shareholders.

Kogan Mobile is the profitability poster child for the greater business delivering stronger growth than expected in the company’s recent full-year results. The division achieved 78.6 per cent of its full year FY17 prospectus forecast gross within the first half of the financial year.

In the six months ended 31 December 2017, Kogan Mobile contributed 4.2 per cent of Kogan.com’s gross profit.

The agreements tie the two companies together with mobile and fixed line agreements which extend until 2022 and includes rolling two-year extensions.

Kogan said that it will continue to provide mobile plans on the Vodafone network and begin to offer mobile broadband plans and NBN plans on Vodafone’s fixed-line NBN network.

While the terms of the deal were not disclosed, it is a big boon for Vodafone as the first commercial agreement for the company since it announced its intention to enter the fixed-line broadband market in October 2016.

Vodafone consumer business director, Ben McIntosh said that given the success of the partnership to date, it made sense to extend the agreement and add in mobile broadband and fixed broadband.

The service will be delivered via the National Broadband Network (NBN) by the end of 2017, reflecting a timely and “natural progression” for the telco, Vodafone Hutchison Australia chief executive, Iñaki Berroeta, said at the time.

In May this year, the telco began reaching out to customers for expressions of interest. Vodafone general manager of fixed, Matthew Lobb, said at the time that the timeline for a late 2017 rollout was still on track and the expressions of interest will allow interested customers to be the first to know where and when Vodafone’s fixed broadband offer will be available ahead of the launch.

It is unclear whether these expressions of interest lead to the commercial partnership with Kogan or if such deals always formed a part of the company’s NBN strategy.

As part of its deal with Kogan, the telco has agreed to provide network and customer service support along with marketing incentives when Kogan launches its service.

Kogan executive director, David Schafer, described the launch of NBN services as a major opportunity for Kogan.com and said the partnership of the two “challenger brands” would deliver value and choice for consumers.

“Kogan Mobile has delivered on its promise to save Aussies money, with tens of thousands of customers already making the switch,” he said. “With low prices and an easy-to-use online platform, switching to Kogan Mobile is simple. Vodafone continues to invest heavily in its network - meaning it is faster and broader than ever, and improving every day.”

“We are thrilled to extend our partnership with Vodafone to enable Kogan.com to offer great new services in mobile broadband and fixed-line NBN.