Telstra’s chances for 3G success marked as ‘slim’ to poor

4 Jul 2005

A report published by Citigroup says that Telstra’s plan to build a 3G network in New Zealand is little more than a ‘bluff’, adding that there is a ‘low probability’ of it actually proceeding with the venture. Citigroup analysts Kar Yue Yeo, Tim Smeallie and Phil Campbell say the investment could cost TelstraClear up to NZD600 million to build the network, but that the operation would not turn cash-flow positive for at least five years. Added to this, it points out that its rivals, Telecom and Vodafone, have already stolen a march on it in the 3G arena, making it unlikely that it will be able to close the gap in the long term. Telecom launched its UMTS network T3G in November 2004 and Vodafone is expected to have a service up and running in major cities and key provincial centres by November 2005. However, Telstra’s 3G network is unlikely to be operational before mid-2006 ‘at which point the marketing window for 3G as a point of difference would have all but disappeared’. In their view, the best that Telstra can hope for is a 16% market share by 2016 and net positive gain on its investment of just NZD78 million.

New Zealand, TelstraClear