New IDC research shows that the New Zealand telco market is continuing to lift itself out of COVID-19 impacts. The 2022 IDC Telecommunications Market Analysis and Forecast Report – Worth Its Weight in Gold, says the overall market is relatively flat with marginal growth of 0.4% in the year to June 2022.
There's varying market performance at the segment level, the analysts find. The market was buoyed by overall strong performance in consumer broadband and pay monthly mobile but much of this was offset but underperformance in mobile phone handset revenues.
This year marks the final year of New Zealand's Ultra-Fast Broadband (UFB) programme. The decade-long programme has been a resounding success, according to IDC.
Uptake has smashed initial targets and has reached 70% as at June 2022. Chorus says 90+% of its fibre connections are now at speeds of 300Mbps or more.
This programme, alongside the continuing investment into rural broadband, enables New Zealanders to engage more fully into digital life. It has been a year of renewed focus on digital innovation for the country, according to IDC.
Monica Collier, Associate Research Director for IDC Australia & New Zealand, comments, "While geo-political pressures, inflation, and supply chain disruptions are causing some headwinds, the telcos are recognising the need to execute on digital first strategies and grow digital product and service revenue."
Meanwhile, the retail broadband market remains a diverse and competitive market. The non-telcos in the market such as Contact Energy and Sky, continue to take broadband market share from the incumbents whilt the telcos remain focused on stabilising their connections bases and continuing their margin strategy.
On-net utilisation is a key facet to make the best use of infrastructure investment and avoid wholesale input costs. In plain language, it describes migrating as many appropriate customers on to fixed wireless broadband as possible. Brand realignments are also helping telcos position themselves into 2023, IDC states.
The newly merged 2degrees will consolidate its brands such as Orcon and Slingshot into a single 2degrees plan, and Vodafone announced its early 2023 brand refresh to One NZ. Vodafone's refresh plans to give the brand a more local look and feel, while 2degrees becomes a full-service market player with a strategy to challenge the incumbents in innovation.
A key technological development that could have a big impact on the New Zealand online connectivity space is the growth of broadband offered through Low Earth Orbit (LEO) satellites such as Starlink.
LEO broadband is forecast to grow strongly as it offers a new choice for end users on slower GEO satellite services, poor performing copper or some fixed wireless services within the underserved and unserved regions in New Zealand.
Wiji Gedera, Senior Market Analyst for IDC Australia & New Zealand, says, "LEO satellite broadband has the potential to narrow the digital divide in New Zealand by offering a new choice for these customers allowing them the same level of online presence as their well-connected urban cousins, enabling them to work, learn and entertain from home."
Overall, IDC forecasts the New Zealand telecommunications market will slowly recover through to 2026 at a Compound Annual Growth Rate (CAGR) of 3.2%. This growth is driven by increasing broadband connections and broadband ARPU (Average Revenue Per User) and pay monthly mobile connections and ARPU and customer move up the value chain and as roaming revenues return.
IDC's study provides a market analysis and forecast of the New Zealand telecommunications market and combines commentary, research and insights about the main New Zealand telecommunications operators with research and survey data on telecommunications trends in the consumer and business markets.
