2degrees returns to pre-tax profit
Vocus integration now complete
2degrees turned in a pre-tax profit and revenue growth for the 2026 financial year. The unlisted company says it managed the positive result despite challenging economic conditions.
Chief executive Mark Callander described the result as marking the completion of the integration with Vocus four years after the two companies merged in 2022.
Revenue grew in each of those four years. In 2026 it increased 5.5 percent to $1.46 billion. The growth was broad across the company’s consumer, business and wholesale divisions. Trading EBITDA rose 6.5 percent to $421.1 million.
Profit before tax reached $27.4 million. That’s a $50 million turnaround from the previous year as non-cash impacts and one-off integration costs unwound.
Callander says that having unified operations, the company is now moving toward growth and market share expansion.
2degrees’ financial progress has come despite persistent domestic macroeconomic pressures. Capital expenditure (excluding spectrum) dropped $21.2 million to $165.8 million as integration work ended. This freed up capital for sales, marketing and digital channels.
Business and government in 2degrees’ sights
The telco has identified the enterprise and public sectors as its growth opportunities. 2degrees currently holds approximately 10 percent market share across business, enterprise and government segments, which management views as substantial headroom for expansion against established competitors.
Backing up this ambition, 2degrees notes several high-profile enterprise and public sector customer wins during FY26, including:
- Ministry of Justice: Migrated mobile services across the government agency.
- Kiwibank: Successfully completed a six-week migration of mobile services.
- Network for Learning (N4L): Connected over 2,500 schools and 900,000 users to its managed network.
- Lyttelton Port Company: Deployed a dedicated private 5G network to support port operations.
2degrees’ growth comes at a time when market leader Spark New Zealand has faced significant operational and financial headwinds. Spark's recent financial results showed declining revenues in its IT services and broadband units, persistent contraction in legacy voice products and ongoing structural reorganisations aimed at cutting costs.
A confident 2degrees positions its unified technology stack and customer service scores—it claims a 10-point Net Promoter Score lead over both Spark and One NZ—as a key differentiator to win corporate and government contracts.
Two big projects
Two major infrastructure initiatives feature in the company’s financial report:
- AST SpaceMobile: 2degrees opened a ground station in Marton to support direct-to-cell satellite coverage across New Zealand.
- Proposed RAN joint venture: The telco announced a proposal in August 2026 to form a shared Radio Access Network JV with One New Zealand to pool physical mobile infrastructure while maintaining separate retail competition, subject to regulatory approval.
More on 2degrees financials
ComCom offers debt shield for fibre networks
The Commerce Commission plans to shift to a five-year trailing average when calculating the cost of debt for regulated fibre operators.
This is the third in a trifecta of recent cost-of-capital regulatory updates. Collectively, the moves will shape network returns and fibre company finances for years to come.
It follows the recent debate over how the Commission calculates market risk premiums.
While fibre operators continue to challenge the regulator over squeezed asset beta figures and market risk premiums, the shift offers welcome relief. It removes the risk of sudden interest rate spikes right before new regulatory periods lock in.
What this means in practice is that regulated fibre providers will no longer gamble on interest rates every five years.
Infrastructure companies do not borrow all their money at once. They issue debt in staggered blocks over many years. A five-year trailing average aligns the regulator's formula with how these businesses actually borrow money in the real world.
For operators like Chorus, it provides a buffer against temporary market shocks. For consumers, it smooths out price spikes, preventing sudden rate jumps from being passed straight onto retail broadband bills. The Commission is also adjusting its allowance for long-term debt spreads (the TCSDA or term-adjusted cost of capital spread) to better cover real-world hedging costs.
The Commerce Commission says it will publish its final decisions on the common cost-of-capital parameters in Q4 2026, alongside a consultation draft covering the exact implementation details and transition rules.
In other news...
- Meta launches smart glasses in New Zealand — NZ Herald (paywall)
Local arrival coincides with Australian government premises ban. - Three-quarters of NZ businesses under cyber attack — Reseller News
Larger SMEs at greatest risk. - Samsung in race to deliver trifold handset — 9to5Mac
Korean firm reportedly shaken by Apple’s recent folding handset.
Election watch: Labour's AI and data centre policy
A recent election policy announcement from the Labour Party includes requirements for data centres to secure their own renewable energy supply and pay for their own connection costs. These are policies that could affect telecommunications companies, including Spark, with data centre investments or aspirations.
SMS scam reports surge over 1,200 percent
Reports of text message scams in New Zealand surged by 1,240 percent in 2025, according to the Department of Internal Affairs' latest Digital Messaging Transparency Report.
Over 1.39 million SMS scam reports were received, compared to roughly 103,000 in 2024. Officials attribute the dramatic rise to the late-2024 launch of "One-Click Reporting" on Apple devices, which made reporting easier. Following this success, the capability is now expanding to Android users.
In 2025, DIA collaboration led to blocking of more than 760,000 scam links and phone numbers. Public reports can be forwarded for free to 7726.
Fortinet expands New Zealand cloud security footprint
Fortinet is adding a second point of presence (PoP) in New Zealand for its SASE platform, saying growing demand for locally delivered secure access is driving the investment.
Fortinet New Zealand country manager Nick Frantzen says the second PoP will provide customers with another layer of resilience.
The company launched its first Auckland PoP to give New Zealand organisations local access to its SASE services. He says demand has continued to grow, with customers placing greater importance on resilience, performance and keeping traffic and data closer to home.
He says discussions with customers are also increasingly extending beyond IT departments, with resilience, data sovereignty and service location becoming business issues around continuity, governance and risk.
This time last year 2degrees showed revenue growth
A year ago 2degrees published its 2025 financial report showing a $22.6 million net loss. The 2025 report showed a significant performance as the business was growing in a relatively flat market and in stark contrast to Spark, which was experiencing challenging conditions.
Five years ago: Australia followed the NZ fibre model
The Download Weekly took a sceptical look at AWS’ plan to build a NZ$7.5 billion New Zealand cloud region by 2024. The numbers looked hard to square with a local cloud market worth only around $730 million.
Ten years ago: Spark’s voice services were deregulated
In 2016 the Commerce Commission moved to deregulate Spark’s wholesale voice services as part of a wider clean-up of old regulations.
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