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nzherald.co.nz | The New Zealand Herald | Friday, November 24, 2017
Most Improved Performance
sponsored by the New Zealand Herald
2degrees
Reaching the turning point
I
Graham Skellern
ts bigger rivals may have thought that 2degrees would run away. But that never entered 2degrees’ mind for one moment. Homegrown 2degrees has been chipping away in the fiercelycompetitive New Zealand telecommunications sector for nearly 10 years and is now making strong headway. It was rewarded by winning the New Zealand Herald Most Improved Performance category in the Deloitte Top 200 awards. The country’s third mobile operator — “a tough role to occupy in a small country” said the Deloitte Top 200 judges — delivered its maiden profit for the year ending December 31, 2016, achieving a 24 per cent increase in revenue and doubling the size of its broadband subscriber base. 2degrees’ profit of $13.4 million reversed the previous year’s loss of $33.1m — a turnaround of $44.5m. Its majority shareholder, Trilogy International Partners, announced in March this year that the adjusted EBITDA growth was 43 per cent. Stewart Sherriff, 2degrees’ chief executive, said in announcing the latest financial result that last year was a turning point for the company. “Total revenue grew as average customer revenues increased, while network costs reduced as we completed a mobile network extension programme. Our mobile customers enjoy 98.5 per cent coverage. “It was the first full year of 2degrees broadband, with customer numbers growing more than 100 per cent as our full service bundle gained traction in the consumer market and our Telecommunications as a Service offering attracted large government organisations such as Ministry for Primary Industries. “The business is maturing while remaining true to its identity as the leader in market innovation. , with national mobile and broadband networks serving all market segments.” Deloitte Top 200 judge Sandy Maier, said 2degrees’ revenue had topped $700 million. “They are big numbers and 2degrees is no longer a small company. These guys are innovators and they have been challenging the incumbents. “They are a disruptive company. They were the first ones in the market to offer an unlimited voice package in 2010 and then in April 2017 unlimited mobile data. 2degrees is willing to try things and the competitors are forced to follow. 2 degrees has been changing the market to the benefit of customers.” Maier said some people may have thought that 2degrees would “bite off more than they can chew”, but the company changed market pricing and has shaken up the duopoly. “2degrees is a young company and has just turned the corner — that made the difference for us in choosing the winner.” 2degrees has more than 1.4 million customers, 1200 staff and 55 retail outlets. In September, 2 degrees announced it was shutting down its 2G services on its nationwide mobile network in March 2018 and upgrading to 4G that customers increasingly demand. Sherriff said 2degrees had not sold 2G mobile phones since 2015 and the company had been actively encouraging 2G customers to move to 3G and 4G phones for the past year. 2degrees also introduced Data Clock, offering time-based data for
What started as a prepay mobile price play has become so much more. Stewart Sherriff, 2degrees CEO
prepay customers, and it is part of the Rural Connectivity Group delivering the government’s RBI2 network. Finalist: Xero Xero, always bold and challenging, entered the Deloitte Top 200 for the first time this year — and therefore it was the first opportunity for the judges to assess the technology company. This is what they found. After 10 years of operating, Xero’s online accounting system was being used by a third of all businesses in New Zealand. Xero was a leader in Australia and it had expansion plans for the Southeast Asian, South African, United States and British markets. Xero is one of the fastest growing “software as a service” companies in the world, with 1800 staff operating in 20 offices. Right from the beginning, Xero had a big international picture and it continued to put runs on the board.
Its founder Rod Drury showed he had the executive skills to go global, said judge Sandy Maier. At the end of the March 2017 financial year, Xero had just over 1 million paying subscribers in 180 countries and its revenue was $295.4 million. The net loss was $69m but this was reduced to $21.1 million six months later. For the half year ending September 30 Xero added 160,000 net new subscribers and peaking at 1.2 million. A total of 1500 updates were delivered this year, and Xero is concentrating on adding more services. Drury told the New Zealand Herald: “We know that small business hate doing accounting, and they’re not trained in it, so we’re well on the journey now to small businesses not having to worry about the technical parts of accounting. “If we can get their documents into the system, then we can do their accounting for them.”
Finalist: Datacom Datacom, founded in Christchurch, has been around the information technology scene for 50 years and it has moved with the times to produce impressive results. One of the leading IT service providers in Asia Pacific, Datacom went through a transformation by expanding into digital and Cloudbased services, and increasing its wide and local area networks. Datacom completed a national network in Australia to connect its interstate data centres and allow access to digital assets and public Cloud resources, including Amazon Web Services and Microsoft Azure. Datacom is spending $45 million upgrading its four data centres in New Zealand, adding more than 2MW of power capacity nationally. Datacom Data Centres Director Tom Jacob said “we are looking forward to further enabling our customers’ digital transformational op-
portunities through the Cloud so they can best take advantage of core emerging technologies such as Artificial Intelligence, Virtual Reality, Internet of Things and hybrid cloud solutions.” Judge Sandy Maier said Datacom was a long-haul story with 50 years of continuous growth. It has had a 10-year compound growth rate of 11.3 per cent — “that’s a good number.” Datacom reported a 61 per cent increase in net profit to $43.7m for the year ending March 31, 2017. Revenue rose 9.5 per cent to $1.16b. The group employs more than 4880 people in 30 offices in New Zealand, Australia, Malaysia, Vietnam, United States and Britain. Maier said Datacom contributes 3.7 per cent of its net profit after tax to charitable contributions. “That’s a very big number for these types of companies and I’ve never seen that before.”