CHART OF THE WEEK

NZ total mass market fibre uptake by plan type

Chorus NZ FY19 earnings update

Total Telco market revenue by vertical (NZ$mn)

Chorus NZ reported a 2% drop in revenues even as it saw record fibre demand. Earnings saw a sharp drop (-38%) driven by higher interest costs on borrowings as Chorus pays for the rollout of its fibre network. The New Zealand telco said its ultra-fast fibre broadband (UFB) rollout is now 80% complete, with 842,000 premises passed and uptake increasing from 45% to 53% in FY19. While the NBN has typically lagged behind the UFB in the past, the rollout has gathered pace in the last few years and is now on par with the UFB. The NBN rollout is now 80% complete with take up at about 55%. For a more detailed look at the NZ telco market, click through to read our NZ telco market outlook.

Spark Sport – getting ready for the Rugby World Cup

Spark Sport has introduced new measures aimed at providing the ‘best possible video quality’ ahead of next month’s Rugby World Cup. These changes come after technical problems marred streaming of the EPL on Spark Sport. While telcos have used various forms of content offerings to prevent subscriber churn in the past, sports streaming is fast emerging as an important battleground with telco bidding for exclusive content rights for popular sports codes. In Australia, both Telstra and Optus are aggressively pushing their sports streaming apps to increase their subscriber share. With 5G, there is an opportunity for telcos to capture a key demographic and even extract revenue premiums from 5G enabled sports streaming if structured correctly. For a more detailed look at sports streaming and how telcos could leverage 5G in the sports SVOD space, click through to read our report.

New MVNO in NZ

Australian MVNO Kogan Mobile has launched its mobile plans in New Zealand. Kogan will use the network of Vodafone NZ in line with its partnership with Vodafone Australia. While Kogan’s introductory offers look competitive, it is probably too earlier to predict if this launch will kick start a new wave of competition in the prepaid mobile market in NZ. While the NZ MVNO market is significantly smaller in terms of market share (3-4%) compared to the Australian market (13%), we believe competing on price alone is not the key to driving growth in this segment. Differentiation will become increasingly important and we expect MVNOs to cross sell and bundle adjacent services like energy, broadband, payment platforms, travel and media. For a more detailed look at how the MVNO business model is evolving, click through to read our Australian MVNO market report.

TVNZ – digital video drives growth

TVNZ has reported a stable operating and earnings performance with continued market leadership in TV audiences, driven by investments in local content and growth in BVOD audiences in FY19. Total revenue declined by NZ$7.8 million (-2.5%) to $310.7 million, with single digit declines in FTA advertising revenues partially offset by double digit growth in digital video revenues. TVNZ’s earnings were in line with Venture Insights’ view that BVOD represents the largest growth driver for traditional broadcasters in both Australia and NZ. Australian FTA’s reported similar results with BVOD revenues partially offsetting declines in FTA advertising revenues.  For a more detailed look at how BVOD played a significant role in offsetting some of the earnings impact on FTAs, click through to read our earnings update for Australian FTAs.