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.
This IDC study provides a market analysis and forecast of the NZ telecommunications market and combines commentary, research and insights about the main NZ telecommunications operators with research and survey data on telecommunications trends in the consumer and business markets. The study provides a comprehensive overview and reference guide to the NZ telecommunications 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."