2010 New Zealand - Telecoms and Mobile Markets

Publication Overview

This report covers trends and developments in telecommunications, mobile communications, including VoIP and regulatory developments in New Zealand. Subjects include:

·         Key players in the market including the incumbent operator;

·         Regulatory changes effecting the market;

·         Planned spectrum changes to the analogue/digital TV and mobile frequencies;

·         Key telecommunications statistics;

·         An overall market snapshot with statistics and forecasts;

·         Trends and forecasts in the telecommunications markets through to 2020;

·         Market analysis and descriptive commentary of historical, current and future market changes.

Researcher:- Paul Budde, Stephen McNamara

Current publication date:- January 2010 (13^th Edition)

Next publication date: December 2010

Executive Summary

BuddeComm’s annual publication, New Zealand - Telecoms and Mobile Markets provides an overview with analysis of the mobile and telecoms sectors in the New Zealand market. We include statistics, forecasts and analysis of the mobile, VoIP and regulatory sectors of the New Zealand telecommunications markets. In the publication we also provide broad coverage on the major players in the New Zealand telecommunications markets with a snapshot of key statistical data, covering all the major telecommunications segments including Internet, broadband, mobile, telephone network and broadcasting.

Unprecedented activity is taking place in the New Zealand telecoms market. The functional separation has allowed some players in the fixed market to improve their margins and to increase their market share. All options are being kept open by these players but it is very likely that Local Loop Unbundling (LLU) consolidation will take place in 2010. Despite all of these activities and new investments the overall revenues in the market are not growing and this is putting all the players in the market under continued financial pressure.

In 2008/09 BuddeComm predicted New Zealand mobile subscriber growth rates of 5.4%. We were not far off the mark as the actual rate was only slightly lower at 4.4%. We also predicted a 6.3% growth rate in 2009/10. After revision of the markets and the regulatory changes together with the after effects of the global financial crisis (GFC), we have now revised our predictions to a slightly lower rate of annual change of 3.8%. These lower rates of annual change in a saturated mobile subscriber market will now be driven by the consumer features available in the advanced 3G network features that the incumbents are pushing and by the entry of the new operator, 2degrees.

Major players in the market

Kordia

In 2009 Kordia launched OnKor, a nationwide managed WAN service, and also KorKor, the first two-way digital radio network in New Zealand. In 2010, Kordia’s profitability hinges on the improvement in the economy of several countries where projects and ongoing services are provided.

Telecom Corporation of New Zealand

In this publication we provide an overview of Telecom’s strategic approach, products and services, business structure, and financial statistics. Telecom’s decreasing trend in mobile revenue may reverse in 2009/10 if new customers takeup the recently released 3G 850MHz XT mobile network.

Vodafone NZ

We provide an overview of the financial and operations of the company. We also provide analysis of Vodafone’s market strategy in relation to the competition from the recently arrived XT 3G mobile and 2degrees networks and the possible benefits to Vodafone from the Ultra-Fast Broadband Network.

Regulatory Environment and Spectrum

By late 2009 the monthly mobile numbers ported has more than doubled the steady rate of the last few years, due to the new mobile networks that were activated in 2009. We provide an update on the renewal of the 800/900MHz spectrum by Telecom and Vodafone and report on the spectrum swap to NZ Communications, the new mobile player now called 2degrees

Monthly porting of local and mobile numbers – 2009

(Source: BuddeComm based on TCF data)

Key highlights:

·         Revenue statistics by market segment;

·         Revenue statistics by major provider;

·         New mobile networks and operators in the marketplace in 2009;

·         Mobile Virtual Network Operator (MVNO) market issues;

·         Overview of planned spectrum changes to the TV and mobile frequencies;

·         Telecommunications market size and estimates;

·         The major players, company financial information and their markets.

Data in this report is the latest available at the time of preparation and may not be for the current year.

Table of Contents

• 1. The Market in 2010
  • 1.1 The Ultra-Fast Broadband Network
  • 1.2 Need for trans-sector policies
  • 1.3 Structural separation needed for Telecom
  • 1.4 Much excitement in the mobile market
  • 1.5 Revival of the smaller players
    • 1.5.1 Functional separation
    • 1.5.2 Local Loop Unbundling
    • 1.5.3 Cabinetisation
    • 1.5.4 Fibre opportunities
    • 1.5.5 Wireless broadband
• 2. Key statistics
• 3. Statistical overview – Telecoms Market
  • 3.1 Introduction
  • 3.2 Revenue statistics and forecasts
    • 3.2.1 Revenue statistics by market segment
    • 3.2.2 Revenue statistics by major provider
    • 3.2.3 Broadband and data market
    • 3.2.4 Mobile market
    • 3.2.5 Fixed-voice and VoIP market
• 4. Market forecasts 2010, 2015, 2020
  • 4.1 Total overhaul of the industry
  • 4.2 Infrastructure market
  • 4.3 The retail market
  • 4.4 The mobile market
  • 4.5 The trans-sector market
  • 4.6 The digital media market
  • 4.7 Business models and Merger and Acquisitions (M&A)
    • 4.7.1 Fixed market scenarios
    • 4.7.2 Mobile market scenarios
• 5. VoIP and fixed-line voice market
  • 5.1 Where is the NZ VoIP market heading?
    • 5.1.1 Residential VoIP adoption will be slow and protracted
  • 5.2 Local VoIP market developments
    • 5.2.1 Market size and estimates
    • 5.2.2 Numbering issues
    • 5.2.3 Residential sector
    • 5.2.4 Business sector
  • 5.3 Local access and fixed voice overview
    • 5.3.1 Fixed-line voice market trends moving towards 2010
    • 5.3.2 Smaller players gaining only limited traction
  • 5.4 Payphones
    • 5.4.1 Webphone rollout
  • 5.5 Fixed-Mobile Convergence (FMC)
    • 5.5.1 Introduction
    • 5.5.2 Service bundling
    • 5.5.3 Dual-mode services
    • 5.5.4 Network convergence
• 6. Mobile communications
  • 6.1 Major mobile operators
    • 6.1.1 Telecom Mobile
    • 6.1.2 Vodafone New Zealand
    • 6.1.3 2degrees
    • 6.1.4 Mobile Virtual Network Operators
  • 6.2 Analysis
    • 6.2.1 Overview of 2009 moving into 2010
    • 6.2.2 The mobile termination rate debate
    • 6.2.3 Bill and keep
  • 6.3 Statistics
    • 6.3.1 Operating statistics, forecasts and analysis
    • 6.3.2 Revenue statistics
    • 6.3.3 Number portability
    • 6.3.4 Comparison of Telecom and Vodafone 3G networks
  • 6.4 Spectrum
    • 6.4.1 Spectrum market and regulatory overview
    • 6.4.2 The Radiocommunications Act 1989
    • 6.4.3 Market developments in 2009
    • 6.4.4 Market developments in 2008
• 7. Regulatory Environment
  • 7.1 Local loop unbundling and TSO
    • 7.1.1 LLU and UBS overview
    • 7.1.2 LLU and UBS market developments
    • 7.1.3 Telecommunications Service Obligations (Kiwi Share)
    • 7.1.4 Telecommunications Dispute Resolution (TDR) Scheme
  • 7.2 Mobile, wholesale and number portability
    • 7.2.1 Mobile services reforms overview – 2009
    • 7.2.2 Mobile services reforms – 2008
    • 7.2.3 Wholesale access
    • 7.2.4 Number Portability (NP)
• 8. Major Players
  • 8.1 Telecom Corporation New Zealand
    • 8.1.1 Company information
    • 8.1.2 Company analysis late 2009
    • 8.1.3 Market developments and strategy overview
    • 8.1.4 Company divisions
    • 8.1.5 Telecom’s network
    • 8.1.6 Subsidiary and associate companies
    • 8.1.7 Products and services
    • 8.1.8 Environmental issue developments
    • 8.1.9 Financial results
    • 8.1.10 Brief company history
  • 8.2 Vodafone New Zealand
    • 8.2.1 Company information
    • 8.2.2 Company analysis late 2009
    • 8.2.3 The network
    • 8.2.4 Products and services
    • 8.2.5 Wholesale and roaming
    • 8.2.6 Financial results
    • 8.2.7 Subscriber and operating statistics
    • 8.2.8 Company history
  • 8.3 TelstraClear Limited
    • 8.3.1 Company information
    • 8.3.2 The network
    • 8.3.3 Wholesale and partnerships
    • 8.3.4 Business and consumer products and services
    • 8.3.5 Business operations
    • 8.3.6 Financial results
    • 8.3.7 Operating statistics
    • 8.3.8 Company history
  • 8.4 Kordia
    • 8.4.1 Company information
    • 8.4.2 The network
    • 8.4.3 OptiKor Trans-Tasman submarine cable
    • 8.4.4 Digital Audio Broadcasting (DAB)
    • 8.4.5 Video-over-IP broadcasting
    • 8.4.6 Financial results
  • 8.5 CallPlus
  • 8.6 M2 Telecommunications
  • 8.7 Southern Cross Cable Network
  • 8.8 WxC (Worldxchange Communications)
• 9. Glossary of Abbreviations

• Table 1 – Country statistics New Zealand – 2009
• Table 2 – Telecom revenue statistics – 2008 - 2010
• Table 3 – Telephone network statistics – 2009
• Table 4 – Internet provider statistics – 2009
• Table 5 – Broadband statistics – 2009
• Table 6 – Mobile statistics – 2009
• Table 7 – Broadcasting statistics – Pay TV and FTA TV – 2009
• Table 8 – Total market revenue by major service – 2006 - 2010
• Table 9 – Annual change in total market revenue by service – 2007 - 2010
• Table 10 – Telco market revenue by major provider – 2007 - 2010
• Table 11 – Annual change in telco market revenue by major provider – 2007 - 2010
• Table 12 – Percentage breakdown of telco market revenue by major provider – 2007 - 2010
• Table 13 – Data market revenue – broadband, dial-up and other data – 2004 - 2010
• Table 14 – Data market revenue growth – broadband, dial-up and other data – 2005 - 2010
• Table 10 – Local access calling revenue and annual change – 2003 - 2010
• Table 15 – Size of fixed trans-sector market – 2020
• Table 16 – Size of mobile trans-sector market – 2020
• Table 17 – Telecommunications services revenue by market – 2010; 2015; 2020
• Table 18 – Telecommunications services revenue share by market – 2010; 2015; 2020
• Table 19 – Local access, calling revenues and annual change – 2003 - 2010
• Table 20 – pieNETWORKS webphone charges – 2009
• Table 21 – Telecom and Vodafone network termination rates – 2009 - 2014
• Table 22 – Mobile subscribers, annual change and penetration rate – 1995 - 2010
• Table 23 – Mobile subscribers per operator – 2001 - 2010
• Table 24 – Annual change in mobile subscribers per operator – 2002 - 2010
• Table 25 – Market share of mobile subscribers per operator – 1995 - 2010
• Table 26 – Mobile subscribers by technology – 2007 - 2009
• Table 27 – Percentage of mobile subscribers by technology – 2007 - 2009
• Table 28 – 2G subscribers by operator – 2006 - 2009
• Table 29 – 3G subscribers by operator – 2006 - 2009
• Table 30 – Percentage 3G subscribers by operator – 2006 - 2009
• Table 31 – Percentage of prepaid customers per operator – 2005 - 2010
• Table 32 – Telecom Mobile annual call minutes and annual change – 2005 - 2009
• Table 33 – Mobile market revenue by operator – 1997 - 2010
• Table 34 – Mobile market revenue growth by operator – 1998 - 2010
• Table 35 – Mobile revenue market share by operator – 1997 - 2010
• Table 36 – Average monthly prepaid and postpaid ARPU per operator – 2005 - 2009
• Table 37 – Annual cost of TSO – 2001 - 2009
• Table 38 – TSO qualified revenue and TRS TSO charges – 2007 - 2009
• Table 39 – Monthly porting of local and mobile numbers, percentage change – 2008 - 2009
• Table 40 – Telecom Group financial highlights – 2007 - 2009
• Table 41 – Telecom Group financial highlights – 2000 - 2006 (historic)
• Table 42 – Telecom Group operating revenue by segment – 2007 - 2009
• Table 43 – Telecom Group operating revenue by service – 2005 - 2009
• Table 44 – Telecom Group expenses – 2005 - 2009
• Table 45 - Capital expenditure – 1999 - 2010
• Table 46 – New Zealand operations operating revenues by service – 2006 - 2009
• Table 47 – New Zealand operations expenses – 2006 - 2009
• Table 48 – Australian operations operating revenue by service – 2006 - 2009
• Table 49 – Australian operations expenses – 2006 - 2009
• Table 50 – Telecom Group financial operating highlights – 2009 - 2010
• Table 51 – Telecom Group operating revenue by segment – 2009 - 2010
• Table 52 – Telecom Group operating revenue by service – 2009 - 2010
• Table 53 – Telecom Group expenses – 2005 - 2009
• Table 54 – Telecom Group operating revenue by industry segment – 2006 - 2008
• Table 55 – Telecom Group EBIT by industry segment – 2006 - 2008
• Table 56 – Vodafone NZ revenue and annual change – 1996 - 2010
• Table 57 – Vodafone NZ annual profit and annual change – 2002 - 2009
• Table 58 – Vodafone NZ average monthly ARPU – pre/postpaid and total – 2003 - 2010
• Table 59 – Vodafone subscriber statistics – 1998 - 2010
• Table 60 – TelstraClear financial highlights and annual change – 2008 - 2009
• Table 61 – TelstraClear: financial data and annual change – 2007 - 2008
• Table 62 – Kordia – financial data – 2010 - 2012
• Table 63 – M2: financial data and annual change – 2008 - 2010

• Exhibit 1 – Comparison of Vodafone’s 3G mobile networks
• Exhibit 2 – Comparison of New Zealand’s mobile networks
• Exhibit 3 – Managed Spectrum Park applicants and requested TLA areas – 2009
• Exhibit 4 – Regulatory timeline – scheduled UBA and other services launch by service variant
• Exhibit 5 – Understanding wholesale bitstream offers around the world
• Exhibit 6 – UCLL connections – 2008 - 2009
• Exhibit 7 – Chart of mobile numbers ported – 2007 - 2009
• Exhibit 8 – Chart of local numbers ported – 2007 - 2009
• Exhibit 9 – Telecom Corporation New Zealand at a glance
• Exhibit 10 – Subsidiary companies
• Exhibit 11 – Associate companies
• Exhibit 12 – Vodafone New Zealand Ltd at a glance
• Exhibit 13 – TelstraClear Ltd at a glance
• Exhibit 14 – TelstraClear’s unbundled exchanges – 2009
• Exhibit 15 – Kordia at a glance
• Exhibit 16 – Kordia overview of financial data – 2006 - 2009

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