New Zealand Q1 Market Update

In last week's issue of The Mobile World Briefing (Issue 70) we commented on the fact that Telecom New Zealand (TCNZ), the incumbent operator in New Zealand, reported significantly lower ARPUs than did Vodafone, its only competitor. We concluded that in part, this was down to its selection of CDMA technology, which meant that it picked up a smaller proportion of the country's roaming revenues. In the light of this, it comes as no great surprise to hear that TCNZ now intends to deploy a W-CDMA network, which it will operate in parallel with its existing system. Following Telstra's decision to abandon CDMA technology in Australia, TCNZ was out on a limb. Admittedly, there are other CDMA systems in the region, notably in Korea, China and Japan, but the nearest of these is over 5,000 miles away so the opportunity for casual traffic is limited. TCNZ is the latest of a growing number of operators that have taken the decision to adopt the GSM/W-CDMA standard, Vivo in Brazil and Reliance in India being two others who have recently taken the same route.

Clearly, TCNZ will be hoping that this decision will not only give it a share of roaming revenues, but also boost its market share. Vodafone took the lead in the market in the first quarter of 2003 and has not relinquished it since then. In the latest quarter, TCNZ took the largest part of the market growth with 61k net adds, against Vodafone's 44k, but this still leaves it well behind. Vodafone closed the quarter with 2.24m connections against TCNZ's 1.86m, which is not quite 55:45 in Vodafone's favour.

The chart above shows the two companies' quarterly net additions expressed as a percentage of their total base. The picture that this shows is quite revealing - TCNZ is by far the more volatile of the two. Vodafone has elected to gather new customers steadily and not make a special effort in the pre-Christmas period, while TCNZ has seen violent swings, from +10% on the one hand to -7% on the other - although it has had the closure of its AMPS/TDMA network to contend with.

In absolute terms, Vodafone has only once added fewer than 25,000 new customers in a quarter, while averaging just under 60,000, while TCNZ has had three such quarters, including one where it lost nearly 130,000 connections. It has averaged 55,000 new customers, enough to give it one extra point of market share over this period. At the end of the quarter, New Zealand's mobile customer base reached 4,099,360. Another 6,467 connections would have taken it to the 100% mark and, given the current run rate, that landmark was probably reached on 3rd or maybe 4th April (the 1st having been a Sunday.)

Finally, we understand that at very long last, Econet Wireless - the third licence holder in the country, now called "NZ Communications" - now intends to roll out a 3G network. What does this tell us? A few years ago, the thought that anyone might try to enter a mobile market that was already 50% penetrated was deemed foolhardy; now, 100% seems to be no obstacle. The strategic planners either assume that churn will provide enough possible customers, or that there are many more customers to be had beyond the 100% mark... or perhaps both.

Whatever the answer is, Econet is not the first operator to take on this challenge, nor will it be the last.

This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World. To download a sample issue of the Briefing in PDF format, please click here. For more information including full subscription pricing, please visit The Mobile World"