Bill Bennett


Tag: 2degrees

2degrees is New Zealand’s third largest telecommunications company. It started as a pre-pay mobile operator but has developed into a full service telco. I

Telcowatch shows Spark ahead in mobile

Telecowatch Q3 2021Spark topped New Zealand’s mobile market share in the third quarter of 2021. It has a 36 percent market share, a mere sliver in front of Vodafone which is on 35 percent.

Adding in Spark’s Skinny subsidiary’s 7 percent market share gives Spark a clear lead. Meanwhile 2degrees remains in third place with a 22 percent market share.

Figures from Telcowatch show little in the way of quarter-on-quarter change. If there is any noticeable change it is that Spark has opened the gap with Vodafone.

Telcowatch is a quarterly snapshot of New Zealand’s mobile market based on numbers from Datamine. The company monitors 2.9 million active mobile devices. It does not include machine to machine devices or smart meters.

As noted last year, Telcowatch figures show the New Zealand mobile market is stable with little switching between carriers.

IPOs on hold as 2degrees, Orcon talk merger

Merger talks between 2degrees and Orcon dominate this week’s news coverage. Here Bill Bennett looks at what a merger might mean for the sector. 

IPOs on hold as 2degrees, Orcon talk merger

Orcon and 2degrees are in merger talks. If they strike a deal the pair would form a third force in New Zealand’s telecommunications market. One that is better placed to compete with Spark and Vodafone.

Both companies were preparing floats. These plans are now on the back-burner. This is not the first time the pair have discussed a form of merger. A few years ago 2degrees looked at acquiring the business when its was operating as Vocus New Zealand and the Australian parent wanted a fast trade sale.

Last night 2degrees US-based parent company Trilogy International Partners issued a statement following a trading halt. It said its had paused its initial public offering of shares in 2degrees “in order to consider a possible alternative transaction with another party”. That’s the nearest the two have come to confirming the news.

How a 2degrees, Orcon merger could reshape the telco sector

A merger between the two companies would cement 2degrees strategy of moving from a mobile carrier to a full service telco.

While this move has been in train for years, Orcon would bring its broadband scale and its considerable enterprise and government business along with its cloud and data centres. It also has a retail energy business that it uses to build product bundles to improve customer stickiness.

Orcon has previously struggled to add mobile to its portfolio thanks to New Zealand’s immature Mobile Virtual Network Operator market Combined the two would have around a billion dollars in revenue. The potential for cost savings would be considerable, more than $100 million.


Little would change immediately in the mobile market. The Commerce Commission’s 2020 monitoring report says Spark and Vodafone each have around a 40 percent share. Which leaves 2degrees on 19 percent.

The remaining one percent is made up of MVNOs. Adding Orcon’s share of the tiny MVNO business won’t move the mobile market dial. However, the merged business has an opportunity to build mobile sales to Orcon’s fixed line customer base. Over time the market share should grow.


In contrast, a merger would immediately reset competition in broadband. The Commerce Commission monitoring report says Spark is the largest broadband retailer with a 40 percent market share.

Vodafone is second with 21 percent. Orcon comes in at number three with 13 percent of the market and 2degrees is next with a 7 percent share.

This suggests a combined 2degrees-Vocus business would be equal second with Vodafone and a long way ahead of the next player Trustpower which has six percent market share.

Wider telco market

Each year the Commerce Commission counts what it calls ‘qualifying revenue’ for New Zealand telcos to determine how much each should pay towards the Telecommunications Development Levy.

While it’s a useful tool for comparing the size of industry players, the calculations include fibre wholesalers. That aside, a combined 2degrees and Orcon would account for around 11.5 percent of the market.

In round numbers that’s around a third the size of Spark and half the size of Vodafone. The next largest retail telco is Trustpower, a long way behind with a 0.8 percent market share.

Australian write-down takes Kordia into the red

Kordia took a $55 million hit at it prepared its Australian operation for sale. That pulled the state-owned network company down to a $47m loss for the year. It made a $9.6 million profit in 2020.

The sale has yet to get regulatory approval. If it goes through, it will, in effect, halve the size of Kordia. Neither Kordia, nor the buyer, Ventia, has revealed the deal price. Revenue for the year was up a whisker at $122.9 million compared with $119.5 million a year earlier. EBITA was flat at $31.8 million.

Kacific cut prices as satellite competition warms

Kacific says it has cut the price of its satellite broadband terminal kit by as much as 50 percent. Prices for New Zealand now start at US$440 (around NZ$630). This compares with around $913 for the rival Starlink hardware.

The company says the hardware is good for speeds of up to 50Mbps down and 10Mbps up. However local resellers quote the download speed at 30Mbps. An uncapped 30Mbps plan on Kacific costs around NZ$290 a month.

CommComms seeks to extend number portability

The Commerce Commission says it plans to extend number portability for another five years. The existing arrangement is due to expire in December. When it renews there will be a small change, customers will be asked to send a confirmation text before numbers are ported to a different carrier. This measure aims to protect customers against fraud.

Vodafone copper to go in six months

Vodafone says it will move around 10,000 customers from old style copper landlines to more reliable digital technology by April next year. Depending on their circumstances customers will move to fibre, wireless, HFC or VoIP services on copper-based broadband connections.

The company says it will save customers money.

2degrees opens trophy cabinet

It may be the smallest mobile carrier, but 2degrees is celebrating a raft of awards for the quality of its network. Ookla, the company behind Speedtest named 2degrees as New Zealand’s most reliable 4G network, the most consistent 4G network and the network with the best 4G availability.

The carrier also topped the recent Opensignal Awards for providing the best upload speed experience, the best video experience and the best 4G availability.

In other news…

CommsDay reports Datagrid has acquired land for its Southland data centre. It has picked a 43 hectare site near Invercargill. Facebook suffered a six hour outage earlier in the week and had its failings publicised by a whistleblower. I discussed this with Kathryn Ryan on RNZ Nine-to-Noon.

Spark CEO Jolie Hodson talks about dealing the the digital skills shortage in an interview I reported for the NZ Herald’s Mood of the Boardroom.

A massive data breach saw more than 100GB of data from game streaming service Twitch posted online.

Reseller News reports on Kordia’s cyber security academy launch.

Microsoft’s Windows 11 Aotearoa keyboard is covered by the NZ Herald.

BusinessDesk says German firm eKomi has acquired Crossware, the Auckland email specialist. (Story behind paywall).


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Spark chooses Nokia to speed 5G rollout

This week: A trial run of The Download 2.0, a weekly wrap of New Zealand telecommunications news. You can subscribe below to get the newsletter delivered to your email inbox every Friday. 

Spark chooses Nokia to speed 5G rollout

Nokia says it has won a deal to supply radio access network (Ran) technology across a large part of Spark’s 5G rollout. The contract will also see Nokia upgrade 4G equipment at the sites.

After a modest start Spark has accelerated its 5G rollout plan. Spark’s FY21 results presentation revealed plans to cover 90 percent of the population by the end of 2023. The move represents a significant capital investment.

Spark’s plan assumes government will have made the necessary spectrum available by then. That’s not guaranteed.

In the early stages of its 5G roll out, Spark awarded contracts to Samsung, a relative newcomer to the network equipment scene.

Previously Spark had worked with Huawei to build its 4G network. That company is now, in effect, blocked from building 5G networks in New Zealand.

Nokia will use its latest AirScale portfolio including the company’s ReefShark System-on-Chip technology. It says this is energy efficient and will allow customers to connect at ten times existing speeds while using less power.

Spark has previously said its accelerated 5G programme will give the company a competitive advantage. The new technology will increase its capacity, offer customers greater speed and expand the reach of its fixed wireless broadband offering.

ComCom signs off Mercury’s Trustpower acquisition

After an investigation the Commerce Commission has given the green light to Mercury’s planned acquisition of Trustpower’s retail business. The regulator says the move is unlikely to lessen competition.

While Trustpower is an energy business, it is New Zealand’s fifth largest retail broadband provider. At the end of last year it had a six percent market share.

Trustpower sells fibre, fixed wireless broadband and mobile phone services. In many cases its customers bundle broadband and mobile services with power.

2degrees announces board ahead of planned float

While telco 2degrees has yet to confirm it will list later this year on the New Zealand Stock Exchange, it has named seven board members in preparation for the float. The seven are Kathryn Mitchell, Ken Tunnicliffe, Mark Cairns, Meg Matthews, Brad Horwitz, John Stanton and Erick Mickels.

In the winter 2degrees held meetings with potential institutional investors in New Zealand and Australia. Majority shareholder, Trilogy International partners has said it aims for an IPO either at the end of this year or early in 2022.

Vocus also plans to float its New Zealand business later this year.

Havelock North 4G tower build back on

A report at Stuff says building work on a Spark 4G tower in Havelock North has resumed. Construction work stopped in 2019 after protests and the site remains controversial with residents.

Online retail surged as New Zealand locked down

Slice Digital, an affiliate marketing network, reports online traffic and sales through its service increased dramatically in August as the nation locked down. Traffic was up 78 percent in the second half of August compared to the first half while sales increased by 162 percent. September sales are running at a 129 percent increase on August sales.

Vector works with Google

Vector is working with Google’s X division to build a map of its Auckland power distribution network. The goal is to build a virtual simulation of the network then use this for planning. The pair say it will help Vector get ahead of increasing demand for clean energy, renewable power and prepare to deal with a large electric vehicle fleet.

Tex Edwards behind supermarket plan

2degrees founder and Hawaiki Cable director Tex Edwards was in the news this week promoting a plan to upset the supermarket duopoly. It’s a move that echoes his involvement in establishing a third mobile network more than a decade ago. If Edwards succeeds with getting his plans off the ground, it will be familiar territory for at least one of his new rivals: Foodstuffs CEO Chris Quinn was a Telecom NZ executive when 2degrees emerged as the third mobile company.


The Download 2.0 is a free weekly wrap up of New Zealand telecommunications news stories published every Friday.

All it requires is an email address. Your address is only used to send out the newsletter. It will not be sold to anyone.

I’m not collecting the data for anything other than sending out the newsletter. You name isn’t going to be sold anywhere.

Digital Boost, Productivity Commission and living standards

On Tuesday small business minister Stuart Nash kicked off the Digital Boost Alliance. On Thursday a report from the Productivity Commission told us why business needs a digital shot in the arm.

The Digital Boost Alliance is a group of 20 companies. It was pulled together by Craig Young who heads Tuanz.

There are multinationals like Microsoft and AWS in the mix. You’d expect that.

Business support

The local companies in the alliance are more interesting.

Money, an important part of the digital equation, is represented by the five main banks operation here. Then come local tech companies: Datacom, Xero and, if we accept Australia as local, MYOB.

New Zealand’s telecommunications sector is represented by Spark, 2degrees and Chorus. Vodafone is a notable non-starter.

CertNZ and MBIE are in the mix. So is The Warehouse. While founder Sir Stephen Tindall is a keen personal supporter of initiatives like this, the Warehouse Group sells a lot of technology and supporting products to small business.

Mindlab is a member. It hosted the launch event.

Access and training

Alliance members aim to improve small business access to digital technology. More important they will help businesses get the training needed to make use of technology.

Each partner offers something different. There are offers of discounts of products and services, extra support, employee training and research.

It’s a big, ambitious goal.

World beating

Nash says he wants New Zealand to have the world’s most digitally-enabled small business sector.

We have been here before. Other initiatives have had similar goals. The difference this time is there is more money, broader industry support. It is a public-private joint venture.

Nash says the government kicked-in $44 million for digital training and advice in this year’s budget.

He singles out cloud computing. He says it has great potential. “A 20 percent increase in the uptake of cloud computing could be worth another $6 billion to the economy.”

Small business web sites

One industry speaker said only half of NZ small businesses have a web site. The implication being this is a measure of how much further we need to go.

Having a web site can help small businesses. It’s an efficient way of finding and retaining customers.

Yet it is not always appropriate. Many small businesses are subcontractors. They don’t need to sell themselves online. Nor do they need to spend money advertising with Google or Facebook.

Their digital needs are elsewhere.

Small business barriers to digital

MYOB surveyed small business owners. The results are revealing.

  • 41 percent say cost is the barrier to technology adoption.1
  • 22 percent say staff training is the barrier
  • 21 percent say a lack of knowledge is the issue.
  • 23 percent say the problem is the time taken to implement.

At the event I spoke to a couple of blokes from Innate Furniture, a Christchurch small business who flew up for the launch.

I assumed their story was going to be about how they built a website and sales took off. Instead they told me how last year they moved all their backend systems to the cloud and how that made a real difference to the business.

This is where there are huge benefits.

Why Digital Boost matters

First, New Zealand’s economy is more dependent on small business than many other economies. Small business accounts for a larger share of our GDP and a bigger proportion of jobs.

Larger companies can afford to have technology specialists on the team. With smaller firms responsibility might be with the owner. Most likely it will be with someone without training or experience.

Second, New Zealand small businesses are smaller than you find in other countries.

We’re talking about companies with a less than a couple of dozen employees and the majority are much smaller than that. In other countries these would be called micro-businesses.

Productivity gap

Third, our productivity lags other countries. Today’s Productivity Commission report says New Zealanders work longer hours than people in other rich-world countries and produce less in each hour they work.

  • 34.2 hours a week compared with a 31.9 hours average in the OECD.
  • $68 of output an hour compared with $85 average elsewhere in the OECD.

These numbers affect our living standards.

Innovation is key

Commission Chair Dr Ganesh Nana says: “Innovation is the key to unlocking New Zealand’s productivity. There are only so many hours in the day that people can work, so creating new technology and adopting new and better ways of working is critical to achieving effective change.”

Which means the Digital Boost project is timely.

If there’s one area both the Digital Boost project and the Productivity Commission agree on is that we need to do more than move people to digital tools.

Show how

The key here is to show people how they can use these tools.

There is an echo with cyber security. Many managers and business people think spending money on security products will solve the risks.

It can help, but without educating employees on how to think in more security conscious ways, that spending is wasted.

Spending money on new computers, software and services is a start. Yet it’s crucial to set aside part of the tech budget for training.

Skills essential for digital boost

Skills are essential to unlock the potential.

Likewise, it is important to use technology where it has the most benefits.

It’s no accident that Xero and MYOB are behind Digital Boost, moving to digital account keeping, tax paperwork and electronic invoicing can have an instant pay-off for a small business.

If Digital Boost delivers, Nash says it can be worth billions of dollars each year to the New Zealand economy.

That’s great, but meaningless to individuals, what matters more is that it has the power to lift everyone’s standard of living.

  1. I’d dispute this. Modern productivity tools are not expensive. ↩︎

Talking on RNZ about Digital Boost

You can hear me talking about this with Kathryn Ryan on RNZ Nine to Noon in new research into the impact AI could have on our work-lives. The broadcast also covers the potential to help shorten the working week and how CD-Roms are finally about to stop working…

2degrees hits revenue high, preps IPO

2degrees has survived its early years and is now thriving. An IPO is on the cards later this year, but there are challenges ahead.

Later this year 2degrees plans to list on the NZX and ASX. That means you could have an opportunity to buy shares in the company.

Whether you choose to invest is your decision. This post is not investment advice.

In its recent annual result report, 2degrees turned in a healthy set of numbers.

Service revenue was $545 million for the 2020 financial year. That’s record for the company.

2degrees heading in the right direction

The year saw 2degrees increase the number of pay monthly subscribers by 3.9 percent. Broadband subscriber numbers were up 13 percent.

Corporate mobile customer numbers were up more than 20 percent in the year to 106,000. These are more lucrative than the individual pay-as-you-go customers.

Between the leap in broadband subscribers and the rise in corporate mobile accounts, 2degrees is heading in the right direction.

On the surface it looks good. For a 12-year old business in a capital intensive area it has exceeded early expectations.

But there is one problem, or, it may be better to say ‘challenge’.

The next challenge

Compared with other New Zealand telcos, 2degrees is a minnow. The challenge is to move on from minnow status. That’s where things get interesting.

Every year the Commerce Commission estimates the relative size of the top telcos. It does this to calculate the Telecommunications Development Levy.

The TDL is, in effect, an extra tax on telcos. The government uses the funds to pay for services that were Telecom NZ’s responsibility when it was government owned.

To work out each company’s contribution, that’s a nice way of saying ‘tax bill’, it looks at the revenue from selling telecommunications services.

Companies have to earn $10 million a year from services to pay anything. While that leaves a small amount not covered by this list, the numbers are negligible.

Which means the levy allocation list reads like an industry league table.Telecommunications development levy table

Spark, Vodafone, Chorus, then 2degrees

Spark is at the top of the table. It has around 34 percent of the market. Vodafone is second with 26 percent. Third place is Chorus on 21 percent.

There’s a long drop to 2degrees which is fourth place. It has about nine percent market share. Next on the list is Vocus with about three percent.

That makes 2degrees roughly a quarter of Spark’s size, one-third of Vodafone’s size and less than half the size of Chorus.

Strictly speaking Chorus isn’t a competitor. 2degrees buys wholesale fibre connections from Chorus. Yet with 2degrees now selling fixed wireless broadband, it will come up against Chorus at least on occasion.

Full service telco

2degrees started out in the mobile segment. That’s where the majority of its business is today. Yet it now offers a full suite of telecommunications services.

It has grown fast in the fixed broadband market. In the most recent telecommunications monitoring report, the Commerce Commission estimates 2degrees has a seven percent market share.

That puts it a long way behind Spark on 40 percent. Spark’s market share include’s the company’s Skinny subsidiary.

2degrees’ broadband business is about one-third the size of Vodafone’s.

Australia’s Vocus has around twice the number of broadband customers as 2degrees. These are spread between brands like Orcon, Slingshot and Flip.

NZ broadband markert share 2020


However you slice the numbers, 2degrees is a small player in an industry where scale can be important.

It’s one thing for Spark or Vodafone to find hundreds of millions of dollars to pay for mobile network upgrades. Those capital expenditure transactions are harder and more risky for 2degrees.

In the past 2degrees relied on vendor finance from Huawei to build its mobile network.

A second competitive issue is that minnows can nibble around the edges of the big fish. They often do well at the edge, especially when it comes to picking up morsels too small for the big fish to see or bother with.

Growing by 2degrees

It’s hard, but not impossible, for a smaller player to advance by organic growth. Over the years 2degrees market share has increased relative to Spark and Vodafone.

Yet the biggest advance in the last decade came, not from organic growth, but from acquiring the Snap broadband business.

This may be the best future path for 2degrees. Vocus has bulked up its business in recent years snapping up smaller brands.

There are another eight plausible small acquisition candidates on the 2020 TDL levy allocation list. They won’t be cheap acquisitions, Vocus is an aggressive buyer and both Spark and Vodafone have indicated in the past they are open to acquisitions.

Acquire or be acquired

It’s unlikely that 2degrees is an acquisition target for the local giants. The Commerce Commission is unlikely to wave through an offer from Spark or Vodafone.

At one point Chorus considered a 2degrees transaction, but that posed regulatory problems.

A merger with Vocus, which is also planning a listing, remains a possibility. Likewise Sky could be a partner.

Vocus is hamstrung without its own mobile network. It has a mobile virtual network, but these deals have never been great in New Zealand. Being part of a larger business with its own network would be better.

There would need to be tidying up of brands and integration of systems. There is plenty of scope for cost savings.

Sky could also do a lot with the 2degrees brand. Adding mobile and a decent slice of the broadband market to its business makes sense. The Commerce Commission vetoed a merger between Sky and Vodafone. It probably would not make the same decision today. It almost certainly would be fine with Sky and 2degrees as a merger would not reduce competition.

Investors looking at the IPO will be wise to value the company on its business-as-usual prospects. But there’s always the prospect of a big deal that could change 2degrees’ fortunes over night.

Rural mobile closing the gap thanks to RCG

New Zealand’s rural mobile users face slower download speeds than people in towns. In almost every case the rural mobile experience is worse.

Although the gap between rural and urban has closed, it could open again as carriers roll out 5G networks.

Opensignal’s May 2021 mobile network experience report puts the improvement down to government-led initiatives.

Both the updates to the Rural Broadband Initiative and the Mobile Black Spot Fund have played a role.

Rural Connectivity Group kudos

Above all, credit must go to the Rural Connectivity Group. This is a joint venture between Spark, Vodafone and 2degrees set up to deliver rural network upgrades.

The three companies had government funding and invested their own money to build additional cell sites in areas needing extra coverage.

To date there have been 200 new RCG towers. Eventually there will be more than 500. If it seems like only yesterday there were 100 RCG towers, that’s because it happened less than a year ago.

RCG carriers share spectrum and resources. The towers are open access, other carriers can use them.

RCG delivering

Opensignal’s analysis shows the programme is already delivering results. There is more to come as further towers are added to the network.

To measure mobile network performance Opensignal collects data from handsets. The business is UK-based and produces similar research in a number of countries.

UK-based Opensignal says the gap between rural and urban mobile experiences is closing.

In its May 2021 report Opensignal says while disparities between rural and urban mobile remain rural mobile is improving.

Time connected to 4G

It reached this conclusion by looking at the proportion of time users spend connected to 4G networks.

In recent months this figure has increased at a faster rate for rural users than those in urban areas. Although rural comes from a far lower base, it is catching up.

Opensignal takes a competitive view of performance. It also zooms in on applications like video and mobile gaming. Yet the interesting angle is how the urban – rural mobile gap is closing.

It ranks the three carriers against each other. If you’re wondering about Skinny, that’s a Spark brand with customers using the Spark network.

2degrees shows the greatest improvement, Vodafone the least.

Customers on the Vodafone network saw the gap between urban and rural time on 4G networks fall 4.8 percent. For Spark users the drop was 5.8 percent. At 2degrees it fell 7 percent.

Closing the gap

Opensignal says before the Covid lockdown 4G availability for rural users was close to 25 percent behind urban levels. Now it sits at around 17 to 18 percent behind.

The report goes on to compare the mobile experience with different types of use. It says only 2degrees urban customers enjoy an excellent video experience. The company’s rural customers do better than Vodafone’s urban customers.

Meanwhile the mobile games experience is underwhelming everywhere. The three carriers deliver a ‘fair’ gaming experience in urban areas. This drops to ‘poor’ outside the towns and cities.

Opensignal scores for rural download and upload speeds are a long way behind urban speeds. Spark is fastest overall. Its urban customers can download at an average of 41.9Mbps. In rural New Zealand, 2degrees’ customers get less than half that speed: 20.2Mbps.

5G can close or open rural mobile gap

The report concludes that if carriers use 5G on lower frequency bands in rural areas, the performance gap with urban mobile would close.

Eventually carriers will be able to use a range of frequencies for 5G.

The distance a mobile signal covers changes depending on the frequency. Lower frequencies travel further, higher frequencies cover a small area. There’s more bandwidth the higher you go up the spectrum.

Alternatively, if they focus on adding high capacity in urban areas, the mobile digital divide will widen.

To date Vodafone has concentrated on building 5G in urban areas. That’s where it sees the greatest demand, not necessarily the greatest need.

Spark started its 5G build in small South Island towns. Now it is building capacity in the main centres.

If the government wants to narrow the rural mobile experience gap, it may need to impose usage conditions on 5G spectrum in future auctions.