2degrees (New Zealand)

Market Overview*

New Zealand is a developed, prosperous country of 4.5 million inhabitants and an advanced economy with steady GDP growth. As a result of 2degrees market entry in 2009, it possesses positive underlying wireless market fundamentals: three wireless operators and a supportive telecommunications framework ensures a rational competitive environment wherein all service providers continue to invest and meet the needs of the population while generating significant return on capital. Historically a prepaid-dominant market, a subscriber shift to postpaid is currently taking place. Prior to 2degrees' launch, the New Zealand wireless communications market was a duopoly, characterized by high prices, lack of product differentiation, and low subscriber usage. It had the sixth highest price per minute of 71 countries surveyed by the GSM Association in 2009 and its prepaid prices ranked second highest of 30 OECD countries. High prices resulted in New Zealand having the second lowest "minutes of use" levels in the developed world and one of the lowest levels of smartphone penetration due to lack of innovation.

*Source: The World Factbook, the Central Intelligence Agency


2degrees: Transforming the
New Zealand wireless market

2degrees entered the New Zealand wireless market as a prepaid-focused disruptor in August 2009, halving the standard prices of voice calls and text messages and attracting over 200,000 customers in the first six months. Over time and years of network investment it brought its service footprint to 98% of the population, and dramatically expanded its retail and distribution footprint to 56 stores nationwide. Throughout this time, 2degrees has been committed to leading the market in innovation and value and has successfully penetrated the postpaid market. With its acquisition in mid-2015 of Snap, Ltd., a local ISP, 2degrees is now a full-service communications provider with a fixed broadband solution that can move further up the customer value chain into the business segment.2degrees has won numerous accolades for its marketing and customer satisfaction including Roy Morgan Research's 'Mobile Phone Service Provider of the Year' for the fifth year consecutively.Today, it has more than 1.4 million customers, 23 percent of the wireless market, with service revenues continuing to outpace subscriber growth.

Learn more about 2degrees at www.2degreesmobile.co.nz


Service Offerings

  • Voice, data and SMS over 2G, 3G and 4G
  • Wireless and fixed broadband services
  • Prepaid and prepaid payment options
  • The only carrier in New Zealand to offer postpaid Carryover Minutes™
  • International roaming in more than 130 countries
  • Real time billing

Shareholder History

In June 2008, Trilogy acquired 26 percent of a greenfield mobile wireless operator in New Zealand, then called New Zealand Communications Limited, renaming it 2degrees. Seeing the potential impact it could make in what was perhaps the last two-operator market in the developed world, Trilogy increased its stake just over a year later to 52 percent. Today Trilogy owns 73.2 percent of 2degrees.

Strong Market Position

Key Operating Indicators
2016e
Service Revenue $321M
Growth 26%
 
Adjusted EBITDA $81mm
Adjusted EBITDA Margin 25%
 
Capital Expenditures $56mm
Capital Intensity 18%
 
Subscribers1 1.5mm
Market Share 23%
Key Operators 2degrees / Vodafone / Spark
 
Network Population Coverage2 98%
Cell Sites 1,017
Substantial Spectrum Holdings: 120MHz
700 MHz 10 MHz x 2
900MHz 9.8 MHz x 2
1800 MHz 25 MHz x 2
2100 MHz 15 MHz x 2

1. Includes wireline subscribers
2. 96% own-network coverage; additional 2% by virtue of national roaming agreement