AUCKLAND, 3rd November 2020: New IDC research shows how New Zealand's telecommunications market is ripe for disruption. COVID-19 has dented revenue
streams, particularly roaming revenue, prepay revenue and handset sales. IDC's 2020 Telecommunications Market Report,
titled "An Unexpected Journey", says the market decreased 2.4% in the year to June 2020. The research forecasts a slow
recovery through to 2024. "Market players will focus on building resiliency and agility, then seek new paths to growth,"
says IDC A/NZ Principal Telecommunications Analyst Jefferson King, "The rate of transition from resiliency to growth
will depend on how digitally transformed they were before the pandemic".
A year ago the telcos were working on their own transformations, focussing on agility and improving enterprise digital
service offerings. The mobile network operators started 5G deployments. Network operators had brought forward capacity
improvements to cater for Spark Sport's streaming of the Rugby World Cup. This year the focus is on collaboration and
conferencing tools, security and quality connections to the home. There's a renewed focus on helping small to medium
businesses. Many were unprepared to participate effectively in the digital economy accelerated by COVID-19. Mix the
above with a sprinkle of lockdowns, a cup of 'new ways of working', and a pinch of 'contactless-everything'. We've
created the perfect storm for a disruptive play in the telco market.
The time is right for a competitor to make a big play, while others might still be scrambling to build resiliency or
taking a conservative 'wait-and-see' approach. There's a couple of key spaces to watch. The first is how aggressively
mobile network operators migrate broadband customers to 5G fixed wireless broadband to save on input costs. Will they
start targetting fibre connections for migration? Will they launch combined mobile and fixed wireless 'wherever you are'
propositions?
Second, Pay TV provider SKY plans to launch broadband services in the next few months; starting with cross selling to
its TV customer base. While the big telco retailers continue to lament the thin broadband margins, this won't bother
SKY. SKY can operate broadband services on little to no margin as a device to reduce churn on its more profitable pay TV
service. Will SKY launch softly, or come out guns blazing and make a more aggressive, disruptive play for market share?
In the report, IDC's guidance to telco players focuses across resiliency and reinvention. IDC's Senior Research Manager
Monica Collier explains, "In this upcoming year, resiliency is critical and the telcos must yet again reinvent
themselves'". She continues, "Success in FY21, as economic uncertainty bites, will be a testament to the transformation
efforts of previous years. Those that aren't well positioned will focus resources on surviving. Those well positioned
will have the resources to capitalise on new opportunities to thrive."