New Zealand telcos continue to enjoy steady gains according to the Commerce Commission’s annual monitoring report, which records $5.42 billion in revenue, up $5.37 billion the previous year.
In contrast the amount telcos spends on investment see-saws each year, with $1.66 billion recorded in the current year – up from $1.58 billion on the year before, but less that the peak of $1.77 billion in 2013/14.
The report was one of a number of telco-related documents that the Commission dropped in the week before Christmas, in a kind of seasonal desk-clearing. Together with the Commission’s final decision on how much liable companies have to pay towards the telecommunications development levy, an interesting picture of the local telco scene emerges.
The same two companies dominate both the fixed (75%) and mobile (73%) retail markets with Spark’s market share 43% in fixed line, and 32% in mobile, and Vodafone’s market share 26% in fixed line and 41% in mobile. They are not however the companies primarily investing in the industry. As the Commission notes, investment is dominated by Chorus and the Local Fibre Companies in the Ultra Fast Broadband rollout.
Challenger brands in both retail markets – Vocus in fixed line and 2degrees in mobile – both have overseas owners who have experienced difficulties in the past year. Vocus NZ was put up for sale last year, but this was withdrawn after failing to reach the right price, while 2degrees’ majority owner, Trilogy International Partners, has seen its shares slide on the Canadian stock exchange.
Meanwhile Vodafone NZ’s new CEO Jason Paris made it clear in his first round of interviews after the taking the role in November, that his job is to prepare for public listing in 2020.
Which puts Spark in an excellent position to roll out 5G technology while its rivals are distracted by ownership issues. It has a strong mobile market position bolstered by its aggressive move in acquiring fixed wireless connections. The Commission notes that New Zealand is now the third highest country in the OECD for fixed wireless connections, which make up 165,000 or 3.3 subscriptions per 100 of population (behind Czech Republic at 10.4 and Slovak Republic at 5.8).
While Spark’s first choice of technology partner, Huawei, is unlikely to get the go-ahead given the Government’s latest stance on using the Chinese communications giant, it still has options in the form of Ericsson, Nokia and Samsung. Other hurdles it faces are the allocation of spectrum that will make 5G technology possible, and the matter of the Commission’s study into the mobile market. The latter will stretch on through the year with the first report due in April and final study completed in October 2019, but its findings will provide an interesting view of the competitive landscape at a critical moment in the next evolution of mobile technology.