New Zealand telco market grows by two percent

New Zealand telco market grows by two percent

The local telecommunications market grew by two percent to June 2008, and Australian telco research site BuddeComm is predicting further growth next year.

According to its latest Telecoms Overview and Analysis publication, the total market grew to $7.1 billion in the 12 months to June 2008. The site predicts the local market will grow around 2.3 percent in 2008/09 and 3.5 percent in 2009/10; although these growth rates could be up to one percent lower, depending on the global financial crisis.

The fixed-line voice market (voice calls and local access) revenues continue to decline, says the report, and has been losing overall share of the telecomms services market for some year. The fixed network voice market declined by four percent in 2007/08 to $2.53 billion.

BuddeComm predicts it will decline a further five percent in 2009/09 and six percent in 2009/10 as phone call prices and volumes continue to drop and more people give up their traditional home phone line.

The report also says data and broadband continue to be a strong market driver although broadband revenues dropped significantly compared with what was anticipated, due to weaker than expected results from Telecom.

BuddeComm also says Telecom's competitors now have more opportunity to enter the market. “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,” says the report.

“Despite these opportunities, there is no doubt that a weakened economy due to the financial crisis will lead to further consolidation in the telco sector, especially among the smaller fixed-line telcos/ISPs.”

According to the report, TelstraClear has been unable to gain market traction and its Australian owner Telstra will in the future show "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".

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