New Zealand Telecoms Industry Report – 2020-2025

New Zealand Telecoms Industry Report – 2020-2025

The New Zealand Telecommunications Industry Report, 2020-2025 includes a comprehensive review of the New Zealand market dynamics, market sizing, market forecasts, analysis, insights and key trends.


New Zealand Telecoms Industry Report at a Glance
The New Zealand telecommunications New Zealand is a stable mobile market with 3 network operators, a nationwide full-fibre wholesale broadband network and the overall market underpinned by strong economic fundamentals.

Idem Est Research forecasts that mobile subscriptions will continue to grow in the 2020-25 period and fixed broadband subscribers will also continue to grow and increase its household penetration over the same period. The ratio of the telecommunications sector revenue to GDP is declining from a peak in 2005, sliding down every year since then.

Idem Est Research forecasts 5G mobile subscribers will represent nearly 52% of all subscriptions by 2025, 4G will represent about 43% of all connections while 2G and 3G will account for the remainder, if not switched off earlier.

Mobile subscribers numbers and revenue are growing strongly and the back of population growth and the market shift to postpaid.

Idem Est Research expects the overall telecoms market to grow through to 2025 after a marked slow down in 2017 and 2018 due to legacy voice revenue pressure partially offset by mobile data growth.

Capex Investments
The Capex to GDP ratio remained relatively stable between 2014 and 2018 but is expected to remain at the same level through to 2025. Idem Est Research estimates that the ratio will settle back by 2023 peaking in 2020. Chorus is still investing heavily in fibre infrastructure until 2022 while Spark and Vodafone have more conservative investment profiles.

Mobile Subscribers and Revenue
Over the last five years, the market shifted to postpaid as subscribers move to Pay Monthly offerings (SIM-only plans) with increased data allowances. Overall, the number of prepaid subscribers continued to decrease slightly. Mobile network operators are facing competitive pressure with the market shifting to unlimited voice and text and data allowance increasingly becoming the sole offering differentiator.

According to our benchmark study of mobile data pricing, India has the lowest rate per GB at just a few cents per GB, while Australia and China had the biggest cost reduction per GB mostly due to increased data allowance in plans while Singapore remains expensive. New Zealand has the highest pricing per GB and Kiwis downloaded the least amount of data over their mobile phones.

Broadband Subscribers – FTTH Push and Fixed Wireless
The Ultra-Fast Broadband Initiative is a New Zealand Government program of building fibre-to-the-home networks covering 87% of the population by the end of 2022, FTTP will be deployed to 1.8 million households and businesses in 390 cities and towns. It is a public-private partnership of the government with four companies with a total government investment of NZ$1.7 billion.

The broadband market is now experiencing low growth mostly driven by new premises construction in greenfield developments or urban redevelopments. The UFB government project reached over 1.7m premises and connected 63% of them or 1.1m premises.

Households growth and a reduction of the number of underserved premises, previously not able to connect now served by UFB2, will drive up the fixed-broadband subscribers.

Thematics – Telecoms Infrastructure / 5G / M&A / Infrastructure
Infrastructure funds, pension funds and government funds are assigning high valuation multiples to telecommunications infrastructure assets such as mobile towers, data centres, submarine cable and fibre infrastructure.

In 2019, Morrisson & Co (Infratil) and Brookfield, both infrastructure funds, bought Vodafone NZ for NZ$3.4 billion (EV/EBITDA of .c7). Globally, many infrastructure funds are investing in mobile towers, FTTH, data centres, submarine cables while that trend is likely to continue over time with more proactive transactions.

All three operators are expected to explore mobile towers monetisation within the next 12 to 18 months taking the opportunity to realise cash from existing assets and focus on the core business of attracting and maintaining subscribers as well as potentially reducing overheads and depreciation charges. For infrastructure investors, the NZ towers would be a new investment opportunity based on long-term income streams and value creation.

Vodafone new owners (Infratil and Brookfield) which are both infrastructure funds are likely to explore a separation of its infrastructure and retail business in the mid-term once its reset of strategy is starting to pay off.

In 2021, both Spark and 2Degrees outlined plans to explore plans to monetise telecommunications assets following global trends.

Idem Est Research predicts the next wave of transactions is likely to continue being about “scale” among small ISPs and largely about infrastructure for Spark, Vodafone and 2degrees.

The arrival of 4G moved the Internet off our desktops into our palms and pockets, 5G could transform the network from something we carry around to something taking us around either virtually (augmented reality or virtual reality) or in reality (autonomous vehicles), the 5G outcome and benefits beyond fast connectivity remain largely unknown in terms of business models, investments required and timeline.

2degrees, Brookfield, Crown Infrastructure Partner, Crown Fibre Holding, Chorus, Enable Networks, Infratil, Northpower, Telecom NZ, Snap, Spark, TelstraClear, Trustpower, Ultra-Fast Fibre, Vocus, Vodafone WEL Networks.

1 Key Statistics
1.1 New Zealand’s Population
1.2 New Zealand’s Economy
1.3 New Zealand’s GDP
2 COVID-19 Impact
3 Overall Telecommunications Market, 2014–2025
3.1 Market Overview
3.2 Historical Telecommunications Market Revenue, 2014-2020
3.3 Overall Telecommunications Market Forecast, 2018-2025
3.4 Telecommunications Market Capital Expenditure, 2014-2025
3.4.1 Historical Telecommunications Capex Spend, 2014-2020
3.4.2 Capex to Revenue Benchmark
3.4.3 Capex to GDP Benchmark
3.4.4 Telecommunications Capex Spend Forecast, 2018-2025
4 Telecommunications Operators Profile
4.1 Spark New Zealand Profile
4.1.1 Spark Revenue and EBITDA Mix
4.2 Vodafone New Zealand Profile
4.2.1 Vodafone New Zealand Revenue and EBITDA Mix
4.3 2Degrees
4.3.1 2degrees Revenue and EBITDA Mix
4.4 Chorus Profile
4.4.1 Chorus Revenue, EBITDA & Capex Mix
4.5 Other Players Profile
4.5.1 Vocus New Zealand
4.5.2 Trustpower
5 Mobile market
5.1 NEW Zealand Mobile Subscribers Historical and Forecast, 2014-2025
5.1.1 New Zealand Mobile Subscribers Historical, 2014-2020
5.1.2 New Zealand Mobile Subscribers Market Share, 2014-2020
5.1.3 New Zealand Smartphone Share, 2020
5.1.4 New Zealand Mobile Subscribers Forecast, 2018-2025
5.1.5 New Zealand Mobile Subscribers by Generation (2G, 3G, 4G & 5G) Forecast, 2018-2025
5.2 New Zealand Mobile Revenue Historical and Forecast, 2014-2025
5.2.1 Historical Mobile Revenue, 2014-2020
5.2.1 New Zealand Mobile Revenue Market Share, 2014-2020
5.2.2 Mobile Subscribers ARPU, 2014-2020
5.2.3 New Zealand Mobile Revenue Forecast, 2018–2025
5.3 Mobile Coverage
5.4 Spectrum Holdings
5.4.1 Historical of Spectrum Auctions and Costs
5.4.2 Upcoming 5G Auctions in 2022
5.4.3 Mobile Frequencies Portfolios Analysis
5.4.1 Spectrum Depth Benchmark by Country
5.5 Mobile Download Data and Pricing Trends
5.6 Mobile Speed Tests
5.7 Internet of Things (IoT)
6 Broadband Market
6.1 New Zealand Fixed Broadband Subscribers Historical, 2014-2020
6.2 New Zealand Fixed Broadband Subscribers Forecast, 2020-2025
7 Telecommunications Infrastructure Investments
7.1 Fixed Infrastructure
7.1.1 The Ultra-Fast Broadband (UFB)
7.1.2 Submarine Cables
7.2 Mobile Tower Infrastructure Landscape
7.2.1 Small Tightly Held Tower Market
7.2.2 Tower Density Benchmark
7.3 Telco Infrastructure Comparative
8 Thematics / Opportunities
8.1 Going for Scale
8.2 Going for Scope
8.3 New Telco Operating Model
8.3.1 The Attraction of Infrastructure Multiples
8.4 5G Developments
8.4.1 5G Overview
8.4.2 5G – Relative Capex Investments and Frequency Range
8.4.3 5G OpenRAN
8.4.4 Beyond 5G and towards 6G
9 Telco Transaction Database
10 Methodology
11 Copyright Notice
New Zealand – Telecoms Industry Report – List of Figures
Figure 1 – Telco sector revenue as % of GDP in New Zealand
Figure 2 –Revenue Profile Historical Mix (NZ$m), 2014 – 2020
Figure 3 –EBITDA Profile Historical Mix (NZ$m), 2014 – 2020
Figure 4 – Telecommunications Market Revenue, 2020
Figure 5 – Telecommunications Market EBITDA, 2020
Figure 6 – Telecommunications Revenue & EBITDA Share, 2020
Figure 7 – Total Telecoms Market Revenue and Growth Rate (NZ$bn), 2018-2025
Figure 8 – Capex to Revenue Benchmark, 2014-2020
Figure 9 – Capex to GDP Ratio Benchmark, 2014-2019
Figure 10 – Telecommunications Capital & Operational Expenditure Spend, 2000-2025
Figure 11 – Spark Service Revenue Mix, 2014-2020
Figure 12 – Spark Historical Revenue Mix, 2014 – 2020 (NZ$ m)
Figure 13 – Vodafone New Zealand Revenue Mix, 2014-2020
Figure 14 – Vodafone New Zealand Historical Revenue Mix, 2014 – 2020 (NZ$)
Figure 15 – 2degrees Revenue and EBITDA, 2014-2020 (NZ$)
Figure 16 – Chorus Service Revenue Mix, 2014-2020
Figure 17 – Chorus Historical Revenue Mix, 2014 – 2020 (NZ$ m)
Figure 18 – New Zealand Mobile Subscribers Share Comparison, 2014-2020
Figure 19 – New Zealand Mobile Subscriber Share Comparison, 2014-2020
Figure 20 – Mobile Net Adds (000’s) Comparison, 2015-2020
Figure 21 – New Zealand Mobile Subscribers Forecast, 2018-2025
Figure 22 – Mobile Subscribers by Generation Forecast, 2018-2025
Figure 23 – New Zealand Mobile Revenue Share Comparison, 2014-2020
Figure 24 – Mobile Subscribers ARPU (NZ$), 2014-2025
Figure 25 – New Zealand Mobile Revenue Forecast, 2018-2025
Figure 26 – Subscriptions per MHz of Spectrum, Select Asia-Pacific Countries, 2020
Figure 27 –Mobile Handsets Monthly Download Data, 2017-2020
Figure 28 – Data Pricing Trends in Asia-Pacific (US$ per GB per month), 2017-2020
Figure 29 – Spectrum available for IoT in New Zealand
Figure 30 – New Zealand Broadband Subscribers Share Comparison, 2014-2020
Figure 31 – New Zealand Net-Adds (000’s) by Operators, 2015-2020
Figure 32 – UFB Services by Speed
Figure 33 – New Zealand Broadband Subscribers Forecast, 2018-2025
Figure 34 – Estimated Tower Market Share, 2020
Figure 35 – Capita per Tower, 2020
Figure 36 – Telecoms Providers EV/EBITDA Ranges
Figure 37 – 5G Network Slices Structure
Figure 38 – Effect of Frequency on Range
Figure 39 – 5G Capacity and Coverage Layers
Figure 40 – Relative Capex Required for 5G Network Infrastructure Investment
Figure 41 – Telecom Infra Project – OpenRAN Vision
New Zealand Telecoms Industry Report – List of Tables
Table 1 – New Zealand – Key Statistics
Table 2 – Telecommunications Market Revenue by Operators
Table 3 – Total Telecommunications Market Revenue, 2018-2025
Table 4 – Historical Telecommunications Capex Spend, 2014-2020
Table 5 – Historical Spark Service Revenue, EBITDA & Capex, 2014-2020
Table 6 – Vodafone New Zealand Service Revenue and EBITDA Mix, 2014-2020
Table 7 – 2degrees Service Revenue and EBITDA Mix, 2014-2020
Table 8 – Chorus Wholesale UFB Pricing,
Table 9 – Historical Chorus Service Revenue, EBITDA & Capex, 2014-2020
Table 10 – Historical Vocus Service Revenue, EBITDA & Capex, 2014-2020
Table 11 – New Zealand Historical Mobile Subscribers, 2014-2020
Table 12 – New Zealand Mobile Subscribers Forecast, 2018-2025
Table 13 – Historical Mobile Service Revenue, 2014-2020
Table 14 – Historical Mobile ARPU, 2014-2020
Table 15 – New Zealand Mobile Service Revenue Forecast, 2018-2025
Table 16 – Historical of Spectrum Auctions and Costs
Table 17 – Mobile Frequencies by Operators and by Band (Mhz)
Table 18 – Historical Broadband Subscribers, 2014-2020
Table 19 – Historical Broadband Monthly ARPU, 2014-2020
Table 20 – New Zealand Broadband Subscribers Forecast, 2020-2025
Table 21 – International Submarine Cable Systems with Landing stations in New Zealand
Table 22 – Spark, Vodafone, Vocus and Chorus Telco Infrastructure Landscape
Table 23 – Technology Specifications (ADSL, FTTN, Fibre, 4G/LTE, 4G/LTE-A and 5G)
Table 24 – Telco Transaction Database, 2001-2020

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