Where will new telco competition arise in ANZ?

Market disruption is increasingly driven by adjacent market operators and incumbent sub-brands rather than new entrants.

David Kennedy · Venture Insights9 August 2024Period: August 20244 min read

84%↑

Market share held by the largest three retail telcos in NZ (2022)

1.3%↓

New Zealand MVNO market share following the Vocus/2degrees merger

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Abstract

The ANZ market is seeing growth amongst smaller MVNO and fixed broadband providers, and shares of incumbent sub-brands are growing too. This suggests there is still scope for market disruption by new entrants in the ANZ market, but this disruption is most likely to come from established brands with an existing distribution network. This will be harder to achieve in New Zealand than in Australia. The report analyzes how scale and adjacent market advantages are now the primary drivers of competitive pressure in the region.

Key Takeaways

Market consolidation has increased the dominance of the top three telcos in New Zealand to an 84% market share as of 2022.
Standalone mass-market entrants are unlikely to emerge due to high fixed costs, as evidenced by Amaysim needing 600,000 users for profitability.
Future disruption will likely stem from adjacent market operators like supermarkets (Woolworths, Coles, Aldi) and utilities (Trustpower, Contact Energy).

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Frequently Asked Questions

Mass-market entry is increasingly difficult for standalone players due to high fixed costs and scale requirements. Historical data indicates a provider like Amaysim required a base of 600,000 customers to achieve its first instance of profitability.

Future disruption will stem from established brands in adjacent sectors, such as supermarkets and utilities, that leverage existing distribution networks. Woolworths already utilizes this advantage by offering mobile credits equivalent to 10% of a customer's largest monthly grocery shop via its loyalty program.

New Zealand is significantly more consolidated, with the top three retail telcos controlling 84% of the market as of 2022. Following the Vocus/2degrees merger, the MVNO segment in New Zealand has been squeezed to a mere 1.3% market share.

Incumbents are aggressively deploying sub-brands like 'Belong' and 'Buddy' to ringfence price-sensitive segments. This strategy aims to protect core margins while competing with adjacent-market entrants that offer aggressive cross-sector incentives like 10% plan discounts.

Where will new telco competition arise in ANZ?

Abstract

Key Takeaways

Frequently Asked Questions

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