Archive for the ‘New Zealand’ Category

Telco Separation Models Costly

Friday, August 21st, 2009

As Telstra is clearly in the sights of the Australian Federal Government ot force separation of its retail and wholesale operations, the company is predicting high costs should such a move become a reality. In its recent 2009 earnings presentation, the telco’s CFO, John Stanhope claimed the value of the company could fall by more than $1.2 billion if the Government followed through on its threat of functional separation.

On the other side of the equation, dozens of submissisions received by The Communications Minister, Stephen Conroy, in support of the separation claim the increased competition is essential before building of the national broadband network.

The next question is what type of separation model is likely to satisfy the Government. Most of Telstra’s competitors are in support of the more stringent structural separation, whilst the Government [at this point] has indicated it favours the less rigourous functional separation. Still a significant change and financial burden. 

Claims by Mr Stanhope indicate that operational separation will likely cost $120 million and take six months, whilst functional separation [as adopted by British Telecom] could cost more than $1.2 billion – and take five years. That represents 10c per share based on current shareholding.

Following shortly thereafter, the the wake of their recent forced separation based on the British Telecom model, Telecom NZ Ltd reported a 43.9 per decline in Net Profit for the year to June 30th 2009, driven largely by Telecom Retail and AAPT. Another indication of the high cost of divorce?

NZ Telco Gap Widening According to Telco Analyst

Saturday, November 15th, 2008

Telco analyst Paul Budde has predicted the financial crisis will result in a drop in Telco consumer demand, putting additional pressure on telco service prices next year. According to Buddle New Zealand’s telco sector will fare better than that of Australia due to the existance of the framework for rolling out its national telco infrastructure aimed at leveling the playing field for seccond tier telcos.

Budde predicts a growth rate of between to 2% to 3% for the telco services market in 2009, depending on the severity of the local economic downturn.

With Vodafone gaining a solid foothold in the fixed line market, Telecom is under increasing pressure in both fixed line calling and broadband and predicted to overtake TelstraClear as Telecoms main rival.

Vodafone has historically held an edge over Telecom in mobile services and Budde predicts the gap will continue to widen. However, Telecoms more competitive 850MHz 3G HSPA network, due for rollout by mid 2009, will help to slow the gain. As more small competitors secure more attractive wholesale agreements, further pressure on prices will be inevitable.

However, outside of the pricing issue one can reasonably expect a further consolidation in the market, especially among smaller fixed-line telcos and ISPs.

TelstraClear has failed to gain any significant gain in market and with investment dollars now under scrutiny, we can expect Telstra to be tight with funds for the New Zealand subsidiary.

Two New Executives At Telecom NZ

Saturday, May 31st, 2008

Two new executives have been announced by Telecom New Zealand:

Group Chief Transformation Officer – Frank Mount – ex Cable & Wireless, is taking over from Telecom executive Simon Moutter who has taken a position as CEO of Auckland International Airport. Mr Mount began his career with 20 years in AT&T. He has held senior positions with several Telcos across Europe, Britain and the US. Most recently he was with Cable & Wireless as Director Group Operations, Group Chief Technology Officer, and CTO Cable & Wireless International. His experience in driving transformational change, and an exhaustive knowledge of the full spectrum of telecommunications and IP technologies will be well utilized during Telecoms current period of transformation.

Chief Executive Officer Retail – Alan Gourdie who is returning from London where he was managing director of Asia Pacific Breweries British and European operations. Prior to that he was as global marketing manager Heineken, based in Amsterdam.

Telecom chief executive Paul Reynolds hopes the two new appointments will bring energy, innovation and clear focus in delivering a new generation of world-class services to customers.

Telecom NZ Ends Cellnet Mobile Distribution Contract

Thursday, April 24th, 2008

The reportedly $A150 ($NZ180 million) a year exclusive distribution contract between Cellnet, a listed Australian mobile phone company and Telecom NZ will end September 30 2008.

Cellnet Group distributes mobile phones and accessories for Telecom, but the agreement will terminate in advance of Telecom NZ’s new WCDMA/GSM network rollout, due in November.

The Cellnet and Telecom NZ distribution contract was signed in 2002, with Telecom NZ becoming the distributor’s single largest customer. The impact on Cellnet,s revenues [$A528.2 million last year] is significant.

Telecom NZ’s Long Term Strategy On Solid Ground

Thursday, April 10th, 2008

Telecom is declaring it is in control with a 2 year loss containment plan underpinning a long term growth strategy, and fronted by its IP platform strategy. Telecoms CEO, Dr Paul Reynolds announced the long term plans for Telecom at its annual management briefing in Sydney.

Key points:

  • Core earnings will moderate during the next two years, followed by a return to growth.
  • “Investing for long term health and to drive bottom line growth.
  • Containment of near-term decline in EBITA to 4-6 percent - FY June 2009 and 0-2 percent FY June 2010.
  • Growth of 4-6 percent a year FY 2011 to FY2013.
  • FY2008 Forecast Net Profit $700 million to $730 million.
  • NZ EBITA – declining 7-8 percent
  • Australian EBITA – $A70m ($NZ82.4m) to $A80m
  • Group ebitda guidance – $1.88 billion to $1.9 billion.
  • Capital expenditure – $975m.
  • Capex FY2009 $1 billion to $1.1 billion
  • New management team – including new CFO Russ Houlden to drive a customer-focused culture
  • An all-internet protocol (IP) platform for efficiency and innovation
  • Moving to a lower cost operating model – more competitive

The Communications and Technology Minister David Cunliffe last week approved the plan to broke Telecom up into three separate divisions:  Network access [Chorus], Wholesale and Retail operations

Telecom NZ Separation Plan Approved For Implementation

Monday, March 31st, 2008

Telecom NZ’s revised separation plan has finally be accepted by Telecommunications and ICT minister David Cunliffe, clearing the way for full implementation of operational separation. In spite of some outstanding issues, including reporting lines for Telecom’s retail unit head, the last version by Telecom met with approval. Performance indicators and milestones included:

  • Group-based incentives for wholesale division managers must not exceed 30% of total income
  • Milestones for next generation network (NGN) rollout
  • Telecommunications Service Obligations
  • Broadband pathway
  • Digital Strategy

Most notable are:

30 June 2010 – more than 1,500 distribution cabinets will be installed or equipped with ADSL2+ or equivalent DSL capability (for example, VDSL capability) in Telecom’s Zones 1,2 and 3 with DSLAMs installed and operational

31 December 2010 – more than 2,200 distribution cabinets will be installed or equipped with ADSL2+ or equivalent in Telecom’s Zones 1,2, and 3 with DSLAMs installed and operational

31 December 2011 – 99% of lines in Telecom’s Zones 1, 2 & 3 (which equates to 80% of existing PSTN lines) will be engineered to have a maximum line loss of 60db measured at 1024kbit/s at the external termination point

2012 - No less than 84% of lines will receive at least 10Mbit/s broadband

The implementation will be monitored under the watchful eye of the Commerce Commission.

Telecom NZ Admits The Bubble has Burst!

Monday, March 31st, 2008

Many telecom Xtramail users can attest to the frustration of being trapped by Telecoms disastrous YahooXtra “Bubble” outsourcing exercise.
The Bubble, floated last August as a joint venture between Yahoo Australia and Telecom, failed to deliver the ’suite of premium services’ offerred, and instead has left both consumer and SME customers looking for answers.

Yahoo!Xtra Bubble aimed to be a “compelling differentiator”, and it certainly achieved that, but unfortunately for Telecom, it was not quite in the direction it hoped for the 600,000 Telecom internet subscribers moved from the Xtra email platform to a Yahoo hosted service.

It is always grafitfying when a large company such as Telecom is big enough to admit its mistake at aiming the new service at small business users. And even better when it comes up with a solution. That solution can be expected some time in the next two months.

With broadband and ISP services key to future growth, I rather suspect Telecom will think twice before outsourcing such a strategic service in the future. Sadly, such experiences do not bode well for the technology industry as a whole, as SaaS services are once again attempting to gain a foothold on the market. In this case, Telecom was the customer, and the vendor Yahoo let them down badly – Xtra has had no control over its email service. I can only hope that for both Telecom and its customers, the next provider has a more robust offering.

Telecom ADSL2+ DSLAMs Now Reach 300,000 End Users

Saturday, March 8th, 2008

Telecom Wholesale has now installed ADSL2+ DSLAMs ([ISLAMs] into 102 exchanges, connecting over 300,000 end-users to Internet speeds of up to 20Mbps. Users living within 1.5km to 2.0km from these exchange can now obtain peak speeds  regardless of the ISP they subscribe to.

Other factors impacting the speed to the end-user’s modem include:

  • ISP allocated international capacity and backhaul
  • Time of of day 
  • House-wiring
  • Modem compatability

For those living beyond 2kms from an exchange, Telecom’s  cabinetisation programme will position the ISLAM nearer to these users, acting like interim exchanges. In the meantime, depending on distance from the exchange, users may experience slight improvements.

A broadband customer who received speeds of 20Mbps is better positioned to utlise:

  • VoIP 
  • Movies, video on demand and IPTV – some way off yet.
  • Much faster download speeds – especially for application upgrades and service packs, which can be around 80MB
  • Improved video streaming from sites such as YouTube

2007 Market Facts:

  • Uptake of broadband in New Zealand is currently at approximately 38%. 
  • Online retail is at only 0.5% of total retail spend [7% in the UK and US].   

NZ Co-Location Services Report Accepted

Wednesday, December 19th, 2007

Co-location refers to the sharing of cellphone towers by communications companies. The NZ Minister for Communications and Information Technology David Cunliffe has accepted the recommendations of the Commerce Commission’s regarding the regulation of co-location services.  Recommendations included:

  • Regulatory settings for co-location will not include pricing – pricing will remain a specified service under the Telecommunications Act.
  • Standard terms determination to be developed early 2008 to address the non-price issues -  technical or procedural matters that are creating barriers for companies to enter the mobile industry.
  • Specified service of co-location on cellular transmission sites should not be added to the designated services contained in Part 2 of Schedule 1 of the Act
  • That the 2 November Vodafone undertaking should not be accepted.

Non-price terms deter entry into the market and prevent competition. The government has therefore put  systems in place to assist market  competition between telecommunications companies.

The Commerce Commission is also carrying out an independent analysis of mobile roaming services.

New Mobile Player For NZ Market

Thursday, December 6th, 2007

A third player is due to enter the New Zealand mobile telecommunications market in 2008.

NZ Communications will offer New Zealand consumers another choice in mobile phone services, after entering into an agreement with Telecom for Telecom to  sell 5 MHz of paired cellular radio spectrum to NZ Communications, suitable for a wide range of cellular technologies.

 NZ Communications also has an agreement with Vodafone NZ, which allows NZ Communications to use Vodafone’s 2G network in areas where NZ Communications has no network coverage.

This entry signals the NZ Government’s regulatory settings in telecommunications are working , new players having more confidence to enter the New Zealand market.

Even better, is that the three players are working together to benefit consumers.

 The New Zealand government Digital Strategy vision is to deliver better, and more cost effective communications, technology and services to all New Zealanders. This vision is being adopted by leading providers in the New Zealand market, fostering new business relationships.