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Spark remains New Zealand’s largest telecommunications company. Previously known as Telecom NZ, it was originally the state owned monopoly.

Callander lays out 2degrees’ post-merger stall

2degrees CEO Mark Callander sitting in the company's Auckland headquarters

With the merger complete, 2degrees CEO Mark Callander shares his initial plans for the business. 

 

Incoming CEO Mark Callander used a press event marking the completion of 2degrees’ merger with Vocus to lay out the company’s stall.

Pride of place goes to a new wireless broadband service which was launched at the event. 2degrees will offer customers unlimited downloads and 5G fixed wireless speeds at an “introductory price” of $65 a month.

It’s a competitive move, but unlikely to scare competitors at this stage.

The price is $4 a month less than Vodafone’s unlimited 5G fixed wireless broadband plan. The gives 2degrees a 5 percent price advantage. Vodafone customers can get unlimited fixed wireless on the 4G network for $55 a month.

Skinny offers a $55 unlimited fixed wireless broadband plan on Spark’s 4G network with average download speeds of 32 Mbps.

2degrees offer an unlimited fibre plan for $65 a month that offers 300 Mbps downloads.

Greater market share

Callander says 2degrees will push into a range of market segments and that he expects the company to take a greater market share.

One area where the merger could have an impact is selling services to businesses.

Before the merger 2degrees underperformed in business markets while Vocus was more successful, especially with small and medium customers. Bringing the two business product portfolios together brings the company closer to parity with Spark and Vodafone.

In particular, Vocus has enterprise customers who, until now, have been supplied with other company’s mobile phones and network services. Bringing this business in-house will not only improve margins but will also give sales teams a better story.

Infrastructure

Callander points out the combined resources of 2degrees and Vocus brings a lot of infrastructure. In most countries the third largest telco has a lot less infrastructure than the biggest players.

He says: “We intend to leverage this to shake up the telco landscape and better service customers across mobile and fixed services.”

Recent large telco mergers and acquisitions in New Zealand have stumbled over integrating back office functions. This is likely to be the biggest challenge facing the merged company. Vodafone continues to struggle with acquisitions from as long ago as the 2006 iHug purchase.

Callander says there is a programme of work to simplify and digitise the business. “We have a lot of experience of this over the decades, and it will be core to the new-look business and how it meets customers’ needs.”


Skinny Jump low-cost broadband in demand as rising prices hit

Spark says the company’s Skinny Jump subsidised broadband programme has seen a surge in uptake. Before Covid there were 4,000 homes connected to the network. Today there are 22,000.

The company puts this down to the fast-rising cost of living.

Skinny Jump is a fixed wireless broadband service. Spark says it is not-for-profit. Families with students in low-decline schools and recent refugees can get it free for one year. After that prices remain low with data costing $5 for 35GB.

Spark CEO Jolie Hodson says: “Not being able to get online is no longer an inconvenience – it means missing out on access to key services such as online banking, not being able to work remotely, kids falling behind at school, and losing the opportunity to learn key digital skills. And with our workforce becoming increasingly digital, this puts these individuals at risk of falling even further behind their peers.”

Read how the Covid pandemic made New Zealand’s digital divide a more pressing problem.  


As if we didn’t know our fibre network is better than Australia’s

Regulators on both sides of the Tasman acknowledge New Zealand’s UFB outperforms Australia’s NBN.

A report published by the Commerce Commission and the Australian Competition and Consumer Commission (ACCC), compares broadband plans in the two countries.

The report shows that at the time measurements were made in September 2021 New Zealand had faster fixed line broadband than Australia. Since then customers on 100 Mbps fibre connections have seen their plans upgraded to 300 Mbps at no extra cost. Which means the gap will now be wider.

Because comparisons were made between 100 Mbps and Fibre Max plans, the download speeds are similar in both countries – or were before New Zealand’s plans were upgraded. New Zealanders enjoy significantly faster uploads. Kiwi customers on 100 Mbps plans could upload at 22.3 Mbps while Australians had 18.2 Mbps.

On Fibre Max, New Zealanders get an average upload speed of 507 Mbps compared with 45.7 Mbps in Australia. New Zealanders see fewer outages.

Australians on fixed wireless can download at an average of 36.4 Mbps while New Zealanders only manage 29.2. Local wireless users get faster uploads at 17 Mbps compared to an average of 4 Mbps in Australia. Fixed wireless users experience three times as many outages on this side of the Tasman.

While Australians enjoy faster fixed wireless broadband speeds, the report notes: “In both countries, there is a significant difference between the performance of fibre and fixed wireless broadband connections.”

Since the survey completed, New Zealand’s average fibre download speed passed the 400 Mbps mark


Global phone Shipments forecast to fall in 2022

IDC says it expects phone shipments to fall 3.5 percent to around 1.3 billion units in 2022. That’s a big turn around from the research company’s earlier forecast of 1.6 percent growth.

To date the sector has seen three quarters of declining sales and supply chain challenges continue to have an effect. IDC says it expects the decline to be short-term and will rebound with an annual compound growth rate of 1.9 percent between now and 2026.

IDC lists inflation, geo-political tensions and continued supply chain weakness among the forces challanging the market but says the lockdowns in China are the greatest threat. These reduce demand in the world’s biggest phone market while simultaneously hitting supply.

Elsewhere Samsung has told journalists it expects to make 30 million fewer phones this year. It will cut the total from 310 million to 280 million.


Spark Sport wins US Open Tennis rights

Spark Sport has signed a three year deal with the US Open Tennis Championship giving the business exclusive television and streaming rights until the end of 2024. Coverage starts in August with the US Open Qualifying Tournament. Spark Spark has other tennis rights, the company recently renewed its Women’s Tennis Association (WTA) rights.


In other news…

SpaceX CEO Elon Musk talked about the next generation of Starlink satellites on YouTube saying they will be larger, more powerful and “in terms of useful bits of data, almost an order of magnitude better than a Starlink 1.0.” At the time of writing he has yet to get approval for the heavier rockets needed to launch the new satellite.

A report in Reseller News suggests Ericsson is the big winner from Huawei’s removal from the NZ telecommunications equipment market. The story says the firm doubled its New Zealand sales in 2021. Its breakthrough came when 2degrees chose the company for its 700 5G mobile sites.

Three years after the world ran out of IPv4 addresses, The Register reports on a plan to free up hundreds of millions of unused addresses. However, as the story points out, this will not be easy.

Average fibre speed passes 400 Mbps

rural broadband initiative mobile tower

New Zealand’s average fibre speed passes the 400 Mbps milestone. Chorus tests a new network application. 

Average fibre speed passes 400 Mbps, uptake at 69 percent

Customers on New Zealand’s fibre broadband network are now seeing average speeds of 405 Mbps. That’s up 7 Mbps on the previous quarter and 128 Mbps higher than six months earlier.

Higher average speeds are a direct consequence of the fibre companies’ moves to raise the standard plan from 100 Mbps to 300 Mbps late in 2021.

The increase has been helped by 12,500 connections switching to gigabit plans during the quarter.

There are now a total of 332 mobile towers built for the Rural Broadband initiative and the Mobile Black Spots programme.

In its latest quarterly connectivity report, Crown Infrastructure Partners says UFB fibre uptake now sits at 69 percent.

That’s up a single percent in the three months to March 2022. During that time a further 12 towns were added to the network.


Chorus tests power outage early warning system

A service now being tested by Chorus can use the fibre broadband network to give an early warning of electricity outages.

Chorus PowerSense uses a feature of the optical network terminal (ONT) boxes that pipe fibre broadband into homes and offices.

When an ONT’s power is switched off, the terminal sends a short ‘last-gasp’ signal that reports the disruption. A similar ‘first-breath’ signal from the ONT lets the network know when power is restored.

This information can be used by power companies who are not always immediately aware of disruptions to the electricity network. It can help them move to fix the disruption and restore power faster.

Chorus says it has completed a successful proof-of-concept trial for the service, working with lines companies including Electra in the Kāpiti and Horowhenua districts. When there were power outages, the lines company reports that it knew what was going on ten minutes before the phone calls started coming in.

The tests show PowerSense is able to identify and locate power outages in near real-time.

Chorus intends to launch the service commercially later this year to all line companies operating in Chorus fibre areas.

There are privacy implications, but Chorus says customers are able to opt-out of having their ONT report back in this way.

Chorus says since the service was first made public earlier this week it has already had enquiries from lines companies about the service.


25 Gbps broadband in sight as Chorus tests Nokia 25G PON kit

Chorus demonstrated Nokia’s 25 gigabit passive optical networking technology to media and industry representatives in the company’s Auckland laboratory yesterday. It was the first 25G PON demonstration in the Southern Hemisphere.

Using test conditions, the hardware managed to hit a download speed of 21.4 Gbps while also carrying a 8 Gbps Hyperfibre connection and a gigabit internet connection over the same fibre strand.

Chorus says it has no formal plan to offer a 25 Gbps product at this stage. And anyway, the Nokia kit will not be commercially available until at least the end of this year.

A future 25 Gbps fibre service will depend on retail service providers choosing to run with the technology and the level of customer interest.

Even so, the company has set down an important marker for where New Zealand fibre broadband is heading.

It took Chorus about three years to get what is now branded as Hyperfibre from the laboratory demonstration stage to a commercial product.


Security incidents down from 2021 peak says Cert NZ

Online security incidents and reported financial losses have fallen back from the peak seen at the end of 2021.

Cert NZ’s Cyber Security Insights report for Q1 2022 says numbers remain high. The government cyber security agency had 2,333 reports in the first quarter of this year.

While that’s a long way down from the 3,997 incidents reported for the fourth quarter of 2021, it is up 63 percent on the same quarter a year ago.

The reported direct financial loss is up 23 percent on the same time a year ago to $3.7 million.

Phishing and credential harvesting top threats

Phishing and credential harvesting make up almost six in ten of the incident reports.

Cert NZ Director Rob Pope says: “Phishing is a major concern as it’s simple to do, from a technical perspective, and it’s a gateway to other kinds of incidents.”

Phishing can give criminals access to people’s credentials which can then be used to access other accounts and systems. They also let attackers know which victims are likely to respond and then use that information to run other scams.

NFTs raise their ugly heads

The quarter has seen the appearance of scams involving NFTs (non-fungible tokens). Cryptocurrency scams remain a rising threat, but these are now complemented by scams looking to buy or sell NFTs.

Cert says NFTs appeal to attackers because they remain unregulated.

During the quarter Cert received eight reports about NFTs with an associated financial loss of close to $50,000.


Spark ponders payphone future

Spark’s payphone network loses money for the company. At a time when almost everyone has a mobile, they don’t see much use.

Yet, even now, there are 2500 remaining payphones around the nation.

Call volumes on payphone have dropped 70 percent tin the last four years. Spark says 90 percent of payphones are used less than three minutes each day. The company says the WiFi hotspot traffic is now on a similar downward path.

This week the company talked about its options for dealing with the phones.

The fact that the technology used in payphones is almost obsolete doesn’t help. Chorus plans to retire the physical copper network while Spark is closing down its PSTN network.

Spark says payphone equipment is no longer made and getting spares is difficult. There’s no obvious path to a fibre or fixed wireless technology upgrade.

While the company is exploring optional uses for payphones, it says it will begin removing low-use payphone later this year. There is community consultation in areas where removing payphones may cause problems.

Otherwise, the search for an alternative use continues.


SMBs plan to increase tech spend

New Zealand small and medium-sized businesses that have survived lockdowns are now increasing their spend on cloud, online security and devices.

That’s the conclusion of a survey conducted by IDC research.

It found 57 percent of SMBs are either growing or humming along in new modes of operation and 62 percent plan to spend more on technology this year. That’s up on the 43 percent who indicated they would increase their IT spending last year.

The analyst firm surveyed 1000 small businesses in New Zealand and Australia – the results were largely similar.

It’s not all good news. IDC research director Monica Collier says: “The impacts from Covid have forced many SMBs to accelerate their digital transformation journey, and many have high aspirations in this space. However, some won’t have the scale for the in-house digital skill sets required for success.”

“A key frustration for many SMBs is where their service provider lacks the ability to help them with business strategy. Service providers that can bridge this gap between technical expertise and business strategy expertise will have a market advantage.”


In other news

Businessdesk reports Spark is taking legal action against Genesis over its use of the logo used by its Frank retail electricity brand. There’s a close resemblance to Spark’s logo.

At Reseller New, Rob O’Neill writes about a planned review of the all-of-government telecommunications-as-a-service (TaaS) contracts. He says the review will take into account how the market for telecommunications is evolving.

The government says its Ārohia – innovation trailblazer grant will support around 100 businesses over its first four years. It will invest $250 million in commercial research and development.

Senior NZ Herald reporter Chris Keall quotes Jarden head of research Arie Dekker who says it would make sense if Spark was to exit the streaming sports broadcasting business. That’s been the trend overseas with telcos either dropping or downgrading their investments in sports broadcasting as either others with deeper pockets bid for the rights or the sports codes develop their own streaming services.

Vodafone has signed a deal with Global Women, a not-for-profit membership organisation pushing for workplace diversity.

CommsDay reports Starlink has launched a plan that gives large vehicles internet access. It covers all New Zealand and most of the southern half of Australia. Having Starlink while on the move adds an extra US$25 a month to the subscription.

Southern Cross Next cable goes live in July

 

Engineers make final splice to Southern Cross Next cable-minJuly will see the Southern Cross Next submarine cable almost double New Zealand’s international data capacity.  

Southern Cross Next cable goes live in July

Telstra announced that the Southern Cross Next submarine cable linking New Zealand and Australia to the US will start operation on July 7.

The new cable expands New Zealand’s international data capacity by 72 Tbps. That means it comes close to doubling our existing capacity to the rest of the world.

Spark is the largest shareholder of Southern Cross Cables Limited, the company operating the existing Southern Cross cable and the next Next cable. Other shareholders include Telstra, which owns 25 percent, Singtel and Verizon.

The 15,900km Southern Cross Next cable runs from Sydney to Los Angeles with branching units connecting to New Zealand, Fiji, Kiribati and Tokelau. It will be the first fibre connection linking Kiribati and Tokelau to the rest of the world.

At first the Next cable will act as the third cable in the Southern Cross network. It will give the capacity a huge boost adding 72 Tbps to the 20 Tbps on the existing Southern Cross cable. It will add a further layer of redundancy. Eventually it will form part of the replacement for the original Southern Cross cable. The plan is to retire the older cable by 2030.

Southern Cross says its new cable is the lowest latency connection from Australia to the US. It is a single span express cable and connects via the most direct route.

More submarine connectivity with ANZ-Chile cable

CommsDay reports that a planned submarine cable linking Australia and New Zealand to Chile has passed an important milestone with due diligence now underway. The US$400 million Humboldt cable will run for 14,810km from Valparaiso to Sydney with branches including one to New Zealand.


Vodafone promises better quality, more reliable calls

Vodafone has enabled Enhanced Voice Services (EVS, also known as HD+ calling) on its VoLTE and VoWiFi network. At present the technology only works with a handful of Samsung and Oppo phones.

The carrier says for consumers EVS means better voice quality and better call resilience when network conditions are less than ideal. This would include during extreme weather. Carriers get improved network capacity with the technology.

Vodafone says it has make other upgrades to its VoLTE calling with the average connection time now less than two seconds.


N4L gives Chatham Islands schools network upgrade

Network for Learning (N4L) says all three schools in the Chatham Islands have had a network upgrade. They now connect via the Rural Connectivity Group’s new 4G network which was recently established on the islands. N4L and RCG worked with Wireless Nation on the project.

Before the upgrade schools on the islands struggled with frequent outages due to their remote location and the robust local climate.

Now students and teachers in Kaingaroa School, Pitt Island School and Te One School have a more reliable internet connection and increased internet speeds.

Philip Graydon, Principal of Kaingaroa School says the internet is three times faster than before.

“Previously, about 30 percent of Zoom calls would fail and drop out. Since the install, no Zoom or Teams calls have failed.”


Spark Sport signs UEFA and motorsports deals

Spark Sport has picked up rights to stream coverage of the 2024 and 2028 UEFA European Football Championship. The tournament which sees nations compete in a tournament over the course of a month is widely known as “the Euros”.

Elsewhere in a busy week Sparks sport streaming business has cut a deal with Discovery as the free-to-air broadcaster for the FIA World Rally Championship (WRC). This will return to New Zealand from September 29 to October 2 later this year.

Head of Spark Sport, Jeff Latch, says: “It’s no secret the UEFA European Championship is one of the biggest football competitions in the world. Adding the 2024 and 2028 editions to Spark Sport’s existing football line-up, is great news for our subscribers.”

Spark Sport recently lost the rights to the English Premier League, which is the hottest football property, but still has rights to the UEFA Champions League, UEFA Europa League, UEFA Europa Conference League, Manchester United TV (MUTV), Liverpool TV and the FA Women’s Super League.

For motorsport fans Spark Sport will be streaming the series “Pace Notes, the Road to Repco Rally New Zealand 2022”.


Infrastructure Commission sees broadband role tackling challenges

Earlier this month Te Waihanga, New Zealand’s infrastructure commission, tabled its first Infrastructure Strategy. It says broadband and other tech can play a huge role helping the NZ infrastructure sector deal with rising sea levels and a shift to a low carbon economy. For more on this see Infrastructure Commission wants digital strategy.


Adams to head Spark cloud business

Richard Adams is to take over immediately from Heather Graham as CEO of Spark’s CCL IT services business. Adams was previously the consumer channels lead at Spark and has been with the business for over a decade.


Vodafone’s Mooney on international trends

Richard Mooney, Vodafone’s chief strategy officer posted a handy five-minute read summary of his presentation to Tuanz on the international trends his company is watching.

While there is nothing unexpected here, he nearly ties up the loose ends with the big trends and shows us what his telco is thinking.

Continued data demand Data has been increasing at around 46 percent each year for a decade across mobile and fixed line networks. Mooney hints at busting the idea of net neutrality and getting the video companies who are now responsible for 80 percent of traffic to contribute to telco costs.

Hyperscalers It’s out of sight for everyday telecoms users, but in the background the largest cloud players are accounting for an ever increasing slice of the telecommunications cake.

Increased role of 5G Consumers, rightly, point out they see few benefits of 5G mobile networks, but away from handsets there is a lot going on, especially in business to business and machine to machine communications.


In other news…

The Australian Financial Review reports Spark and Vodafone are moving ahead on plans to sell their mobile tower networks. The AFR says Spark will keep a 30 percent stake in the towers and begin auctioning the remainder in June. It says Vodafone is expected to call for bids in the next week or two.

Mobile payments company Pushpay showed a 31 percent increase in customer numbers and a 13 percent rise in operating revenue in its 2022 annual result. The company’s EBITDAF (that’s earnings before interest, tax, depreciation, amortisation and foreign currency gains or losses) came in on target at US$62.4 million. Net after tax profit was up seven percent on last year at US$33.4 million.

Strong revenue and customer growth didn’t stop Xero from making a $9 million loss in its 2022 financial year. The cloud accounting company passed the billion dollar a year milestone and increased customer numbers but also saw design and development expenses rise 49 percent.

 

MBNZ records leap on 300 Mbps upgrade

Last year’s fibre speed upgrade from 100 Mbps to 300 Mbps has paid dividends. Starlink has increased prices overseas with local changes expected to follow soon. 

MBNZ records leap as popular fibre speeds triple

In its latest Measuring Broadband New Zealand report, the Commerce Commission says the average download speed is now 314 Mbps.

This is a result of moves by fibre wholesalers to boost speeds on 100 Mbps plans to 300 Mbps at no extra cost. The initiative was first pushed by Chorus as a way of meeting competition from fixed wireless broadband and taken up by the other fibre wholesalers.

All the benefits of this upgrade have been passed on to customers.

The report found average peak hour download speeds on Fibre Max plans have improved in the last three months. The average is now 841 Mbps. That’s up from 807 Mbps late last year. Almost three quarters of tests run on Fibre Max lines now show speeds above 900 Mbps.

Past surveys showed customers on Vodafone’s HFC Max plan experienced a speed decrease. This has now returned to normal.

Almost every customer (99 percent) with a Fibre 300, Fibre Max or HFC Max plan is able to stream four simultaneous UHD Netflix streams.

Telecommunications Commissioner Tristan Gilbertson says these results highlight the difference between popular fibre plans and lower speed broadband technologies – including 4G wireless broadband and copper. This is important for homes where more than one person is using the connection for high data use activities such as online gaming and video streaming.

He says: “Ensuring consumers understand the speed they can expect from different technologies is critical to them choosing the broadband plan that best suits their needs. This reinforces why we issued our marketing guidelines last year, which has led to retailers using MBNZ results in their advertising.”


Starlink hikes prices

Starlink has raised prices for customers in the US by between 10 and 20 percent. The low earth orbit satellite broadband provider says the increase is a result of inflation, which has taken off worldwide in recent months.

The US price of its antenna hardware will climb from US$500 to $600 for new customers. American customers will see the cost of a monthly connection rise from US$100 to $110.

At the time of writing Starlink has yet to communicate any changes to New Zealand users. The price of the hardware has already increased once for customers here.

When the service launched the hardware price was NZ$800. It is now $1040. If local prices increase in line with the US, customers here can expect to pay over $1200 for the hardware. Reports from overseas suggest each antenna kit costs Starlink around $3000 to make and dispatch.

Monthly charges in New Zealand are $160. Local customers can expect that to rise to around $180.


Trademe, other services block local Starlink accounts

Users on a Starlink discussion on the Geekzone site have reported problems connecting to services such as Trademe which rely on geolocation to permit traffic.

The problem was caused when Starlink moved users to a new point of presence. The company says the affected service providers have yet to update their list of allowed IP addresses.

One Geekzone poster suggests the problem also affects streaming services from Disney+ and TVNZ as well as the Lotto website.


Spark takes Adroit slice

Spark now owns close to 40 percent of Adroit, a specialist in environmental internet of things technology.

Mark Beder, Spark technology director, says it is a strategic investment reinforcing his company’s commitment to IoT. He says: “Our three-year strategy identifies IoT as a key future market, and in the last financial year we saw strong revenue growth and an 83% percent increase in connections.”


Spark issues sustainability bond

Spark’s Finance subsidiary has completed the bookbuild for a 6.5-year NZ$100m Sustainability-Linked Bond.

Sustainability bonds are a form of finance where the cost is linked to meeting goals such as carbon reduction.

In this case Spark pays an interest rate of 4.37 percent if it can reduce greenhouse gas emissions. If it fails to meet a 56 percent reduction by June 30 2026 it will pay a higher rate.


AWS: One million Kiwis need more digital skills

Cloud vendor AWS issued a report on the state of digital skills in New Zealand businesses. It says a third of workers, about a million people, will need to pick up more digital skills in the next year.

The report put it in more polite terms, but says New Zealand has one of the biggest ‘skills gaps’ of any country AWS has surveyed. In part that’s because we have embraced digital technology more than other nations.

Predictably AWS identified cloud skills as an area needing urgent attention. It also singled out cybersecurity skills.


Spark Sport adds more Netball coverage

Spark Sport has the New Zealand rights to Suncorp Super Netball, the world’s largest netball competition. Games start this weekend, the first match features the NSW Swifts against the Giants. Spark Sport also has rights to Australian international fixtures, although not games featuring the Silver Ferns.


Spark hires Beckett as strategy director

Aliza Beckett is to join Spark’s leadership team, taking on the new role of strategy director. She joins from Liberty Global London, a telco specialising in converged communications. Before that she spent time with Amazon Studios, YouTube and McKinsey. Beckett takes up the job in June.


In other news…

A cyber attack on the day Russia invaded Ukraine disrupted residential broadband services across Eastern Europe. The outage affected Viasat’s satellite operations and customers of at least six ISPs. At the time of writing, late Thursday evening, connectivity problems continue to affect users.

In related news the US Cybersecurity and Infrastructure Security Agency (CISA) issued an alert over potential threats to satellite networks as America braces for expected cyber attacks(story behind paywall).

‌Tarana Wireless a US-based wireless broadband technology company closed off a funding round as it prepares an IPO. The company offers a low-cost fast broadband technology that delivers gigabit speeds via fixed wireless networks.

Customers of Apple’s online services experience outages on two days this week. There were problems with Maps, the App Store, Apple Music and the online story. The outages were not related to cyber attacks.

 

NZ cell towers are for sale

Vodafone says it is preparing to spin out its cell tower network, Spark announced similar plans a month ago. Why is this happening? 

Cell towers on the block

Vodafone and Spark have both revealed plans to sell their networks of cell towers. Both telcos have close to 1500 towers which could unlock a billion dollars or more each.

Spark took the wraps off its plans to establish Spark TowerCo when it announced its half year result in February.

At the time Spark New Zealand Chair Justine Smyth said: “…in the second half Spark intends to establish Spark TowerCo to improve the utilisation and capital efficiency of its passive mobile assets and open up opportunities to introduce third-party capital.”

Spark CEO Jolie Hodson says establishing a TowerCo would “…improve the performance, utilisation, and capital efficiency of its passive mobile assets”.

This week Vodafone announced a similar plan. The company’s part owner Infratil told investors last month plans for a tower spin-off were at an advanced stage.

On Monday Vodafone said it has engaged Barrenjoey and UBS to advise the company on a sale. The company’s press release mentions the possibility of using shared infrastructure.

Analysis: Why telcos are selling mobile towers

New Zealand’s mobile operators are late to the tower sell-off game. Vodafone Australia sold 140 of its towers 14 years ago in 2008. Since then there have been many similar deals around the world.

The logic is straight-forward. In the fibre era, mobile phone towers represent the bulk of a telco’s capital investment.

Towers can account for a large slice of operating costs. Spinning them off and renting them from tower companies and, in some cases, from rival operators or the tower companies set up by rival operators, can cut costs.

More importantly, these deals can boost margins. That looks like delivering better value for shareholders.

The move can be a step on the path to shared infrastructure. This was controversial at one time but the success of the Rural Connectivity Group which builds shared mobile infrastructure for the three mobile companies has removed any fear from not owning towers.

While mobile operators might not want to share wholly-owned infrastructure with rivals, that is not going to worry a tower operator. Indeed, they will woo potential business.

Strategic value

It’s worth mentioning that at an earlier stage in nationwide mobile roll-outs, networks of towers had strategic value to operators. With coverage approaching 100 percent of commercially viable sites, that’s no longer the case. There is no competitive advantage in owning towers in 2022.

There’s another angle to consider. Over time higher frequency spectrum will become available for 5G networks. Higher frequencies require greater tower density, that means more towers. A lot more towers. Getting that cost off the telco balance sheet and establishing shared infrastructure now will make that a less daunting proposition for mobile company shareholders.

European mobile companies have raised billions of dollars selling their towers. There are plenty of willing buyers with large businesses building up international tower portfolios. It’s an attractive proposition for them because they have guaranteed long term tenants.


TVNZ RNZ merger to complete by next year

Broadcasting and Media Minister Kris Faafoi confirmed the government will move ahead on its plan to merge TVNZ with RNZ. He said the deal will see the two businesses fully merged by the middle of next year.

The deal will see RNZ remain commercial free. TVNZ will stay commercial but would no longer pay a dividend to the government. It appears the merged business will be a not-for-profit operation.


World phone market up 6 percent in 2021

Gartner says worldwide phone sales grew six percent in 2021 after falling in 2021. Yet the research company says the numbers would have been better were it not for component shortages and supply chain problems.

Samsung remains top brand with 19 percent market share. Apple remains in second place head of Xiaomi, Oppo and Vivo in that order. The remaining companies accounted for 32 percent of all units shipped. Their share continues to fall, last year they represented 40 percent of the market.

Rival research company IDC has similar numbers for the brands while putting the market increase at 5.7 percent.


Apple launches low-cost 5G iPhone SE

This year’s iPhone SE includes support for 5G networks. The SE is a smaller size iPhone with a 12 megapixel camera. It costs NZ$800 and will go on sale next Friday, March 18.


…in other news

US Commerce Secretary Gina Raimondo reminded China’s technology companies of the fate dealt out to Huawei. She says they could be in the same boat if they sell to Russia. Raimondo has China’s top chip maker Semiconductor Manufacturing International Corporation (SMIC) in her sights, but it could apply to others attempting to fill the gaps left by western companies.

Dell’Oro Group says the worldwide SD-Wan market grew 35 percent in 2021 as enterprise customers optimised networks for cloud services. It hit revenues of over US$2 billion. Cisco is the market leader with Fortinet in second place, VMware, Versa and HPE are the other top five brands.

At Reseller News Rob O’Neill reports on boom times for New Zealand’s tech sector. Stats NZ says sales of software and services are up 39 percent over the last two years.

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Mobile shines for Spark, tower division planned

This week saw a buoyant set of first half results from Spark, Chorus and Sky. Spark plans TowerCo spin-off.

Mobile shines for Spark, tower division planned

Spark reported a five percent lift in revenue to $1.9 billion as it turned in a strong set of figures for the first half of the 2022 year.

At $179 million, after tax profit is up 22 percent on the previous year.

The company announced plans to establish a separate TowerCo business unit to manage its 1500 mobile towers. This will allow it to attach fresh third-party capital.

Vodafone has previously talked of similar tower spin-off plans. Both companies now see the passive network infrastructure as not providing a competitive advantage.

Mobile service revenue was up five percent while broadband revenue fell 3.9 percent. The company maintained its gross broadband margin as it switched customers from fixed-line to fixed-wireless internet.

Spark says it plans to introduce further competitive wireless broadband offers in the second half of the year.

Cloud, security and service management revenues grew 3.2 percent. Spark says this growth was fuelled by demand for public cloud and growth in the health sector.

IoT connections surged 31 percent during the half year to 623,000.

Spark confirmed its Ebitda guidance range for the 2022 financial year at $1.13 to $1.16 billion and says it expects to come in at the top end of this range.

CEO Jolie Hodson says: “Despite closed borders keeping roaming revenues suppressed, we delivered a market-leading mobile performance, underpinned by precision marketing and increasing customer demand for data, with 48 percent growth in our Endless plans year-on-year.”


Chorus ups guidance as UFB near completion

Chorus reported a first half net profit of $42 million, up from $27 million in the same period in 2021.

Ebitda increased 5.5 percent to $347 million on a 1.3 revenue increase to $483 million.

Chorus says it aims to pay 35 cents per share this year and a minimum of 40 cents next year. In 2024 the planned payout rises to 45 cents. An interim payout of 14 cents per share is set for April.

The company says it will buy back up to $150 million shares over the next year.

Chorus CEO JB Rousselot says the government supported Ultrafast Broadband network build is nearing completion.

“Our fibre rollout is now close to completion with just 30,000 or so premises left to pass.More than 1.3 million homes and businesses have fibre at their doorstep; of these 67 percent have now chosen to connect.”

Fibre connections grew 47,000 in the first half of the year. They now total 918,000. Rousselot says Chorus is on track to meet its goal of a million connections by the end of the year.

A highlight of the year for Chorus was its move to boost basic fibre speeds to 300mbps. This has helped lift New Zealand up the world broadband speed rankings. It now ranks 11 in the world for fixed line broadband speeds.


Sky resumes dividend payment

Sky reported a first half net profit of $28.3 million, down from $39.6 million a year ago. Revenue was up four percent at $371.7 million with the company’s streaming revenue up 34 percent year on year. The company says it will return to paying a shareholder dividend from this year after putting payments on hold.


$47 million earmarked for rural broadband upgrades

Crown Infrastructure Partners has signed contracts with private sector contractors to work on a series of rural broadband upgrades.

The Rural Capacity Upgrade includes new towers in rural areas where there is poor wireless broadband performance. In other places existing towers will be upgraded. There are plans to extend fibre and VDSL coverage in places.

David Clark, the communications minister, says 47,000 rural households and businesses can expect faster internet speeds and better reception by the end of 2024.

Money for the upgrade comes from the government’s Covid response and recovery fund.

Clark says: “The Covid-19 pandemic has shown us reliable internet is critical to being able to work, learn and socialise from our homes. Having been through lockdowns, it’s clear some rural networks had real trouble adapting to the extra usage.”


Vodafone expands FiberSense monitoring pilot

Vodafone says it will expand its real time underground fibre cable monitoring trial. The trial uses FiberSense monitoring technology to check on more than 100km of fibre in the company’s central Wellington optical network. It looks for threats to the network from earthquakes and from civil works, water or gas leaks among other risks.

Improving Measuring Broadband New Zealand programme

Telecommunications commissioner Tristan Gilbertson says there are opportunities to improve the Measuring Broadband New Zealand programme and wants industry feedback on the ideas.

One option is to include more technologies, providers and plans in the coverage. This may include satellite broadband. Another is to include monitoring of in-home Wi-fi performance.

Submissions to the Commerce Commission close 16 March 2022.

Tuanz CEO Craig Young says the Measuring Broadband reports are important because the industry has used confusion as a marketing tactic. Being able to make better comparisons between providers changes that.


InternetNZ concerned about social media harm

In an opinion column published by Stuff, InternetNZ chief executive Jordan Carter warns of the dangers of a social media monopoly.

Carter quotes InternetNZ research which shows almost four out of five New Zealanders use one of the services operated by Meta each day. Meta is the new name for the Facebook organisation.

This, he says, means there is, in effect, a social media monopoly and that it is causing an ever increasing amount of harm. In particular he notes the negative impact of misinformation.


Tonga reconnects submarine cable

It took two weeks for engineers to restore the single submarine cable connecting Tonga to international networks. The international cable and the domestic cables connecting the nation’s islands were cut by the violent January volcanic eruption. While the external link is working again, connections between islands remain broken. Reports from Tonga say wireless communications are struggling to provide adequate coverage while the islands wait for cable repairs to complete.


In other news

CommsDay reports Singapore-based MyRepublic plans to launch mobile services in New Zealand.

The University of Waikato, Kordia and ASB have set up Scott Bartlett Memorial Scholarship to give financial support to final year students studying business management and the sciences. Each year three students will get the $4000 award. Former Kordia CEO Scott Bartlett died in 2020.

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