Wednesday, 04 November 2020 11:07

IDC claims New Zealand telco market is ripe for disruption

IDC claims New Zealand telco market is ripe for disruption Image by Chickenonline from Pixabay

New Zealand's telecommunications market is ripe for disruption, the technology analyst firm IDC claims, pointing out that the its revenue stream had decreased by 2.4% in the year to June 2020.

IDC said roaming, pre-pay and handset sales revenue were particular areas of concern, and that its research showed that would be a slow recovery stretching up to 2024.

"Market players will focus on building resiliency and agility, then seek new paths to growth," said 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."

IDC pointed out that one year ago, telco outfits were working on their own transformation, with mobile network operators starting 5G deployment while 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," the company said.

"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' and we've created the perfect storm for a disruptive play in the telco market."

Due to these factors, IDC claimed the time was 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 targeting fibre connections for migration? Will they launch combined mobile and fixed wireless 'wherever you are' propositions?" the company asked.

"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?"

IDC's senior research manager Monica Collier said: "In this upcoming year, resiliency is critical and the telcos must yet again reinvent themselves.

"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."

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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