Growth spurt tipped for telecoms market

By PETER GRIFFIN

The multibillion-dollar telecoms market grew 5 per cent in 2002 while regulatory uncertainty and restructuring took its toll on investment across the industry.

Research from telecoms analyst and commentator Paul Budde estimates the New Zealand telco market will exceed last year's growth of 3 per cent. A growth spurt of nearly 8 per cent is predicted for next year.

Budde said Telecom's domination of the fixed-line telephony market had not been challenged this year, however next year's scheduled review of local loop unbundling - opening up access to Telecom's copper network - could mean "dramatic changes", despite overseas examples showing unbundling had failed to stimulate competition.

Telecom's share of the fixed-line voice market slipped slightly from 85.4 per cent in 1997 to 78.8 per cent this year, according to Budde.

A further drop of 1.2 per cent is predicted for next year. Telecom generated revenue of nearly $2.8 billion from its New Zealand wireline business in the year to June 30.

"With no significant infrastructure developments by TelstraClear, Telecom has been unchallenged and remains the dominant player in the all-important lucrative local loop market," Budde's report says.

Budde said little infrastructure investment had been made this year "largely as a result of regulatory uncertainty and restructuring".

He said the second-tier telco market did little except "keep its head above water". And mobile hopeful Econet's plans to launch a GSM network to rival Vodafone and Telecom had made "little or no progress".

Though Telecom continued to rule at home, Budde said the chance of its being bought by an international player remained strong.