Publication Overview
For those needing detailed overviews, statistics and forecasts, as well as objective analysis on all aspects of the New Zealand telecoms industry, this report provides essential reading and gives in-depth information on:
· An overall market overview, statistics and forecast.
· Key players in the market.
· Telecommunications infrastructure.
· Regulatory developments.
Reseracher:- Phil Harpur
Current publication date:- December 2008 (12th Edition)
Next publication date:- December 2009
Executive Summary
BuddeComm’s 2009 New Zealand - Telecoms Overview & Analysis publication provides a detailed overview, including statistics, forecasts and analysis, of the regulatory, infrastructure, fixed network voice and VoIP sectors of the New Zealand telecommunications market, as well as an overview of the key market players and global trends.
Market statistics and forecasts
The total telecoms market in New Zealand grew by 2% to $7.1 billion in the 12 months to June 2008. BuddeComm predicts that the total New Zealand telco market will grow around 2.3% in 2008/09 and 3.5% in 2009/10, although these growth rates could be up to 1% lower, depending on the severity of the global financial crisis.
Fixed-line voice market (voice calls and local access) revenues continue to decline and has been losing overall share of telecom services market for several years. Overall the fixed network voice market declined by 4% in 2007/08 to $2.53 billion and we predict that it will decline a further 5% in 2008/09 and 6% in 2009/10, as phone call prices and volumes continue to drop and more people give up their traditional home phone line. Long-distance calling prices in particular continue to fall.
Data and broadband continues to be a strong market driver although broadband revenues dropped significantly on what was anticipated due to weaker than expected results from Telecom. Pay TV revenues were weaker in the 2008 financial year than previous years due to a soft local economy. Revenue growth rates in this sector are predicted to pick up again in 2008/09 and reach a growth rate of 8% in 2009/10.
Annual change of total market revenue by service in New Zealand – 2007 - 2010
|
Revenue category
|
2007
|
2008
|
2009 (e)
|
2010 (e)
|
|
Annual change
|
|
Fixed voice & local access
|
-2.0%
|
-4.0%
|
-5.0%
|
-6.0%
|
|
Data and broadband
|
7.8%
|
7.0%
|
8.2%
|
8.1%
|
|
Mobile
|
0.4%
|
4.6%
|
5.4%
|
6.3%
|
|
Pay TV
|
12.6%
|
6.6%
|
9.0%
|
10.0%
|
|
Total telco market
|
0.5%
|
2.0%
|
2.3%
|
3.5%
|
(Source: BuddeComm based on industry data)
Opportunities in the second tier market
Even Telecom New Zealand has itself admitted that functional separation has already begun to stimulate competition in New Zealand. Existing participants now have the opportunity to extend their activities, and additional competitors now have more opportunity to enter the market which has previously been dominated far too much by Telecom. Smaller competitors now have more attractive wholesale arrangements coming into place and this will put further pressure on prices, which have historically been far too high due to Telecom’s overwhelming market dominance.
But market consolidation will continue
Despite these opportunities, there is no doubt that a weakened economy due to the financial crisis will lead to further consolidation in the telecom sector, especially among the smaller fixed-line telcos/ISPs. Also, TelstraClear, the country’s number two fixed-line operator, has been unable to gain any market traction, despite the opportunities that are opening up due to functional separation. It is quite likely that its owner across the Tasman, Telstra, will show increasingly less interest in the telco in a worsening financial crisis, as any potential investment funds earmarked for New Zealand, are diverted back to home soil.
Key highlights:
Impact of financial crisis
· As in Australia and other developed markets, the financial crisis will most likely led to a drop in consumer demand and this will put pressure on telco service prices during 2009.
· New Zealand’s telco sector will actually be better placed than that of Australia. Despite a potentially weaker economy as a result of the financial crisis, it has already put in place the framework for the rollout of its national telco infrastructure, which will hopefully begin to give second tier telcos a more level playing field.
Market competition
· Competition will continue to grow in 2009 in the New Zealand market, although from a very low base due to the enormous market power that Telecom has had up to functional separation in 2007.
· It has been a long process for Vodafone to integrate fixed-line telco operator ihug, after an acquisition back in 2006, but finally Vodafone seems to be gaining traction in the fixed-line market with DSLAM wholesale agreements in place by late 2008.
· Vodafone will push hard in 2009 to further its rollout and will start to gain significant market share from Telecom in both the fixed-line calling and broadband market.
· Other players like Orcon will also continue with DSLAM rollouts and make good progress, and this will stimulate healthy ADSL2+ competition.
Data in this report is the latest available at the time of preparation and may not be for the current year.