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The Kogan.Com Ltd share price is soaring on a Vodafone deal  

The Kogan.Com Ltd (ASX: KGN) share price climbed 4% to $1.52 today after the discount online retailer announced it will team up with Vodafone Australia to offer residential NBN internet services in 2018, alongside mobile broadband plans in 2017.

Kogan is primarily a discount retailer of electronic goods, but has already partnered with Vodafone to operate as a mobile virtual network operator (MVNO) in order to offer mobile plans under the budget Kogan brand, while piggybacking off the Vodafone network.

There’s little doubt that Kogan will also offer very cheap residential fixed-line internet services on the NBN in another sign that the competitive environment is toughening for market leaders like Telstra Corporation Ltd (ASX: TLS), TPG Telecom Ltd (ASX: TPM) and Vocus Group Ltd (ASX: VOC). In particular the market is already factoring in a post-NBN profit margin crunch for many of the big telcos’ bottom lines.

Kogan is forecasting pro-forma EBITDA (operating income) of $11.5 million for the full year ending June 30 2017 under the leadership of its entrepreneurial founder Ruslan Kogan.

The company is also debt free with cash in hand of $23 million, but unless you’ve been living on Pluto over 2017 you’ll have noticed that U.S. discount online retail giant Amazon Inc. is planning on moving into Kogan’s backyard of Australia.

Despite its diversification and impressive track record I’m not a buyer of Kogan shares, especially when there are so many other opportunities available on the share market.

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Motley Fool contributor Tom Richardson owns shares of Amazon Inc., TPG Telecom Limited and Vocus Communications Limited. The Motley Fool Australia owns shares of Telstra Limited, TPG Telecom Limited, and Vocus Communications Limited.

You can find Tom on Twitter @tommyr345

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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