When most consumers think of Spark brands, I assume they would think of the home and business offerings of Spark and Spark Digital, but through a spate of investments and acquisitions, consumers may well find themselves contributing to Sparks success without realising it.
In recent years there has been well documented acquisitions by Spark of CCL and Digital Island. What is perhaps less well known is that Spark is also the largest shareholder of NOW with almost 37%, and also holds 30% of Feenix Communications.
Each of these brands are very different in the clients they target and the strengths they bring to the table, but there is one clear constant in each case, Spark has not sought to alter the brands or align them to an image that would resemble that of its own brand.
This is a smart move in a number of ways. Firstly, these moves are not a concern to the Commerce Commission, so while they increase Sparks influence on the NZ telecommunications market, they are not in themselves perceived to introduce barriers to competition or degrade outcomes for consumers. Because of this the process is greatly simplified.
The brands Spark has invested in have each got a history and market perception that hold value in their own right. CCL was purchased 3 years ago and has continued to operate strongly as an independent brand, and all indications so far are that Digital Island will be handled in the same fashion.
In the case of NOW and Feenix Communications those companies get a couple of key benefits from Sparks Investment. The obvious first aspect is that of capital, telcos are not cheap to start up, so being well funded is critical. But the other benefit is that of access to Spark’s purchasing channels and economies of scale. In a market constantly eating away at its thin margins, access to lower cost national and international routes is a key competitive advantage.
Indications are that this trend is spreading. Since Vodafone’s purchase of WorldxChange (WxC) in 2015, the branding has remained stable. This is in contrast to earlier acquisitions such as that of Telstra by Vodafone where the brand was fairly quickly done away with.
In short, it is no longer as easy as it once was to determine who we are buying from in the NZ telecommunications market, and as innovative smaller players with well regarded brands continue to be acquired, that effect will only be enhanced.
Brendan Ritchie
