NZ telco market under pressure as competition increases
The New Zealand telecommunications market is under pressure, with revenues declining 1.8% (NZ$5.1 billion to NZ$5.0 billion) in the year to June 2013.
Forecasting that this trend will continue with a compound average revenue decline of 1.5% per year until 2017, IDC's market analysis - "Too Big to Fail" has been released.
Providing a comprehensive overview, financial forecast and reference guide to the NZ telecommunications industry, the report shows an industry under duress.
According to findings, the level and nature of competition has increased dramatically over the last year as the market has seen the emergence of the NZ$69 to NZ$75 bundles in the broadband market and the increasing popularity of the NZ$19 prepaid bundles in the mobile market.
Customers in general, are now faced with an increased range of choices and even better value than they had at the beginning of 2012.
"Competition for end customers has been fierce over the last year," says Peter Wise, Research Manager, IDC New Zealand.
"Prices have dropped for broadband and fixed line bundles and in mobile there is significantly more value packed into the typical plan than there was a year ago,"
Fixed Market
The overall fixed market declined 3.8% from NZ$2.65 billion to NZ$2.55 billion in the year to June 2013.
Traditional voice revenues fell in excess of 6% and continue to be the main contributor to the overall decline as New Zealanders change their usage patterns and shift to naked broadband with IP voice, mobile and alternative channels for communication.
Despite significant growth in the number of broadband connections, IDC says broadband revenues contracted slightly in the year to June 2013 as a result of price competition.
Mobile Market
The mobile market grew a modest 0.3% during the year to June 2013, from NZ$2.45 billion to NZ$2.46 billion, with Mobile Data growth being offset by declines in revenues from Mobile Voice and Messaging.
Mobile connection numbers are also lower than they were a year ago, largely as a result of Telecom's shutdown of its CDMA network. As a result Telecom also became the third player in the prepaid market by connections, behind Vodafone and 2degrees.
Vodafone retains the number one spot in Mobile by revenue, followed by Telecom and 2degrees.
"The mobile market saw significantly more competition in the year to June 2013," Wise adds.
"Telecom, in particular has been far more aggressive in both the prepaid and postpaid markets."
The Future
As a result of the findings, IDC are forecasting a continuing slow-down in the overall telecommunications market to 2017 with an average 1.5% revenue decline per annum.
"Increased competition, increasing cost challenges, capital expenditure needs and a limited scope for increasing revenues in the core market are going to put further pressure on the telcos," Wise says.
"It is going to be a tough time for senior management in the sector."
