Abstract: Venture Insights has now published its 2024 forecasts for the Australian and New Zealand business mobility markets. The ANZ mobility market for businesses is a relative bright spot in a competitive segment. Venture Insights forecasts that Australian total business mobility revenues will grow at a CAGR of +2.3% over FY23/28. In New Zealand, we forecast +2.0% CAGR. Competitive pressure remains strong in the market for fixed connectivity and value-added services for business, making mobility an increasingly important category for incumbent telcos.

Positive ANZ business mobility forecast 

Low economic growth in FY24 has been reflected in lower-than-expected FY24 business mobility ARPUs and hence lower revenues than we expected last year. As the market returns to growth following a slower than expected FY24, revenue is expected to grow across most mobile product lines, but with the strongest percentage growth performance in mobile handheld services and IoT connectivity.

In Australia, the total B2B mobile services and hardware revenue (small and medium business and enterprise) will grow at a CAGR of +2.3% over FY23/28 to reach A$5.124bn. In New Zealand, the total B2B mobile services retail market will grow at +2.0% CAGR over FY23/28 to reach NZ$998 million.

The market is divided into mobile carriage (mobile handheld, mobile broadband, and hardware), IoT connectivity, and related mobility services.

Mobile carriage dominates. Mobile carriage growth (+1.4% in Australia and +1.9% CAGR in New Zealand) will be primarily driven by mobile handheld services, driven in turn by higher connection numbers and some ARPU uplift from migration to higher-value plans. In contrast, we expect a long-term decline in mobile hardware revenue due to lengthening handset replacement cycles and the growth of BYOD.

IoT connectivity revenue will grow faster, but off a much lower base (+7.3% CAGR in Australia and +9.2% in New Zealand), driven by customers’ digital transformation and the productivity benefits the technologies can deliver in many industry verticals. Most of the opportunity is still in larger transformative projects in the enterprise segment, which has greater maturity in adjacent technologies such as AI and data analytics. There will also be some growth in the medium segment (20-199 employees in Australia, 20-99 in New Zealand) as some IoT solutions scale up and become affordable to organisations with more limited budgets.

Managed mobility services will also grow fast (+7.2% CAGR in Australia, +4.0% in New Zealand. Growth is driven by the adoption of BYOD policies across industries as organisations seek greater flexibility and productivity while maintaining security and privacy in the workplace. 

Why does this matter?

The enterprise market is becoming increasingly competitive, especially in markets“higher up the stack”. Telcos now face competitive pressure from both small, nimble challengers like managed service providers (MSPs) and from global competitors in the systems integration and cloud businesses.

To add to the pressure, the NBN Co’s and the LFC’s entry into wholesale business access fibre has introduced a new industry dynamic, allowing MSPs to use wholesale fibre to compete with large telcos in the enterprise and mid-market. This has disrupted business fibre pricing and led to falling ARPUs are eroding the telcos’ fixed connectivity revenues in the business market.

These pressures have had obvious impacts on the incumbent telcos. Telstra has embarked on a cost-cutting program in its enterprise division, while Optus was forced to write down the value of enterprise network assets to reflect the changed market environment. In New Zealand, Spark’s total IT revenues fell -1.6% in FY24, driven by a 15% decline in IT services revenues.

It is therefore important that there is still growth potential in enterprise and mid-market segments. This is part of a broader trend in the ANZ telecommunications industries for telcos to generate more value from their mobile assets, which they retain in-house. The contrast with the fixed market, where much fibre access is controlled by wholesale-only operators, is sharp and getting sharper.

About Venture Insights

Venture Insights is an independent company providing research services to companies across the media, telco and tech sectors in Australia, New Zealand, and Europe.

For more information go to www.ventureinsights.com.au or contact us at contact@ventureinsights.com.au