2degrees reports strong growth across key market segments

Revenue increased on the back of significant growth across the business, and this contributed to a 16 per cent increase in underlying statutory EBITDA to $339m.
This underlying result was after adjusting for the $620m earned from the one-off sale of passive tower assets the prior year.

Total revenue for the period increased 7 per cent year on year to $1.34 billion.   
“2degrees continues to increase market share across consumer and business market segments, reflective of the fact that more New Zealanders are choosing 2degrees as their provider of mobile, broadband and electricity services,” said 2degrees Chief Executive Mark Callander.

There were significant revenue increases across the core product portfolio.  
Broadband revenue increased to $415.9m from $371.6m, mobile was up to $555m from $509.0m and energy was up to $122.7m from $109.3m.   
“2degrees is well positioned as customers look for better value alternatives to lower their costs and manage the impacts of more challenging economic conditions,” said Callander.

“We’re achieving this level of growth because of the value, service and productivity gains we can provide to customers when they need it most. In addition, our investment in the network continues to deliver more capacity and improved 5G coverage across the country.”

The momentum achieved in FY24 sets the business up well for continued growth over the next 12 months.

2degrees has secured some key enterprise and government customers, including Network 4 Learning that will be moved to the 2degrees network in FY25.

Network and service delivery costs across the business increased 6 per cent to $726.8m to support the revenue growth. Employee, Administration and other OPEX reduced by $15.4m (5 per cent) through disciplined cost management and the delivery of integration milestones.  The reductions were partly off-set by the inflationary environment that added cost pressures in some areas of the business.

Cashflow from operating activities was up $59.0m on the prior year in the latest financial results to $169.0m, which will support ongoing capital investment in the network and digital initiatives to improve the customer experience.

Merger progressing well and growth investment continues

Following the merger between 2degrees and Vocus in 2022, the company has focused on integration and growth.

“Since the merger, we have been focused on making the three-year integration programme of work as seamless as possible for our customers while transforming the business for future success,” Callander said.

“We remain on track to meet the integration targets from a financial and technology perspective, while maintaining the challenger culture across the newly formed business.”

As of November 2024, 2degrees’ network includes 2,156 cell towers that cover 98.5% of the places Kiwis live and work, as well as a 4,600km owned fibre network throughout the country. 5G coverage has increased to more than 28% of the country, and more than 63% in Auckland, 55% in Wellington, and 52% in Christchurch.

“A key area of investment has been in our technology environment and the augmentation to a single stack to meet the needs of our customers and provide better internal tools for our staff,” Callander said.

“We continue to invest in our proprietary software stack, which will be a key point of difference in our ability to deliver digital outcomes for our customers while improving our speed to market for new initiatives. Owning the technology environment will also improve opportunities for innovation across all products and markets we choose to compete in.”

2degrees continues to have strong growth ambitions for the coming years. “We understand the important role that we play in the market as a challenger and the responsibility that comes with that,” said Callander.

“Our objective is to keep giving Kiwi customers, whether pre-paid or large enterprises, good reasons to join us and stay with us.”