The New Zealand retail telco market is forecast to return to growth expecting to reach NZ$5.37 billion in 2026.
This is according to analyst firm Venture Insights, which predicts the market will achieve a compound annual growth rate of 0.9 per cent (F21-FY26).
“Overall, we expect the telco market to be hampered by a slow economy, inflation, and reduced immigration,” head of research at Venture Insights, Claudio Castelli said.
“But new technologies like 5G, the progress of the UFB and increasing adoption of fixed wireless are growth opportunities.”
Castelli predicts nominal prices will rise because of inflationary pressure and greater premiums associated with new 5G plans, resulting in higher ARPUs and some market recovery.
“However, growth will be lower than inflation,” he said.
The analyst firm said mobile and fixed broadband will grow while fixed voice continues to decline as consumers move to VoIP and mobile.
The analyst firm particularly noted mobile phone calling has overtaken fixed voice calling in both minutes and revenues.
“Cheaper VoIP services and migration to video collaboration tools such as Zoom and MS Teams are reducing usage of voice across the consumer and B2B segments,” Castelli said.
In a Venture Insights consumer survey revealed that 23 percent of respondents were expecting to pay more for their mobile phone service each year.
“This is good news for the industry. It suggests consumers are starting to see the effects of inflation and are expecting this to flow into their mobile services,” he said. “With customers expecting price rises there will be some room for MSPs to improve ARPUs without necessarily triggering consumer churn.”
In June 2degrees and Vocus NZ officially became the country’s third-largest telco with an annual turnover of $1.2 billion.
But despite the increased scale, CEO of the combined business Mark Callander said 2degrees would retain its challenger mindset and further disrupt the telco market for the benefit of New Zealand consumers.
“2degrees is a well-recognised and trusted brand, now offering New Zealanders access to a world-class mobile network, a national fibre network, as well as energy capability," Callander said.
In May, Vodafone NZ co-owner Infratil reported the telco improved earnings in the year to 31 March, with full year EBITDA of $481.0 million up from $436.6 million.
Total revenues of $1.97 billion were up slightly from $1.95 billion in 2021 as gains in mobile and other revenues were offset by continuing declines in fixed line services.
Once again, the results highlighted how the competitive telco battlefield had changed.
"The mobile market continues to be characterised by competitive, but sensible behaviour, with each player looking to grow sustainable revenues through average revenue per user (‘ARPU’) improvements as opposed to short-term connections," Infratil said at the time.
In February, NZX-listed telco Spark New Zealand thrived in its first half of the 2022 financial year reporting a revenue increase today of 5.2 per cent, driven by mobile.
That growth and lower depreciation costs helped drive a 7.6 per cent increase in EBITDA to $538 million. Net after tax profit increased 21.8 per cent to $179 million.
Spark reported revenue of $1.89 billion for the half year, with mobile service revenue up 5 per cent. While broadband revenue fell 3.9 per cent in what Spark described as a highly competitive market, gross margin was maintained as the benefits of wireless broadband growth offset increased fibre costs.
While major ultrafast broadband provider Chorus reported increased profits and revenue during its first half of the 2022 financial year.
Net profit after tax (NPAT) of $42 million to the end of December was up from $27 million in the same period last year while earnings increased from a restated $328 million to $347 million, albeit including $15 million of one-off benefits. Underlying EBITDA was $332 million compared with $328 million.
Chorus is close to completing its decade-long fibre rollout. With just 30,000 premises left to receive service, its programme is scheduled to end next year.