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Vodafone NZ bets on 5G leadership to drive margin growth

Vodafone NZ bets on 5G leadership to drive margin growth

5G will help Vodafone deliver fixed wireless services and reduce its reliance on fibre companies

Credit: VHA

Vodafone NZ says its leadership in 5G mobile network rollouts will reduce its reliance on wholesale fibre and underpin margin growth.

In a report released yesterday to the shareholders of major investor Infratil, Vodafone said it was New Zealand’s largest 5G mobile network provider, around three times the size of its "nearest competitor" - Spark.

New 5G capable phones, including the new iPhone, were expected to drive uplift in customer demand.

But it is about a lot more than mobile as Vodafone also plans to reduce its reliance of Chorus and other local fibre companies to further cut costs.

5G would be a significant enabler of fixed wireless access and "on-network" acceleration and Vodafone would target 2021 and 2022 5G rollout locations with this in mind.

This was also a "likely to be a transition point" for the New Zealand mobile industry, where providers would consider infrastructure sharing options, the report said.

"New 5G use-cases rapidly emerging, still predominantly in the business space, but consumer use-cases are coming," it said.

Vodafone NZ also  said it would seek to drive revenue growth in focused areas such as enhanced wholesale offerings, for example through mobile virtual network operator (MVNO) channels and in priority enterprise practices such as security.

The projected EBITDA impact from COVID-19 in 2021 was between $60 million and $75 million, with year to date impact to September 2020 of $29 million locked in.

COVID-19 especially damaged revenues from roaming, pre-paid and retail channels and this was expected to run into 2022.

The pandemic also presented opportunities, however, including increased demand for Vodafone's "unique set of network assets as connectivity resilience became more critical.

ICT opportunities were also accelerating as security, public cloud, IoT and data privacy became essential.

Digital uptake would also see Vodafone delivering a number of cost reduction and customer experience benefits earlier than expected.

The change in ownership in the middle of 2019 from Vodafone global had created the "best of both worlds", Vodafone NZ said – a NZ-centric strategy with global products, platforms and scale.

However, the global strategy and historic under-investment in some areas had created "strategic choices". 


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