Executive Summary
Spark New Zealand Limited is a company that offers telecommunication and ICT service in Australia and New Zealand. Its headquarters is based in Wellington, New Zealand. Additionally, Spark offers voice and data, internet, fixed-line and mobile phone calling services. The firm service provision is at international, national and local level dealing in data and internet provision services, value-added telephone services, and mobile services. Despite steep competition from other Kiwi companies, Spark Company has prospered becoming smarter day by day as it continues to harness all the advantages of the new technology advancements such as the internet provision and cloud services. Spark Company’s success is attributed to and dependent on its customers in their main market, New Zealand. The company is passionate and focused on utilizing technology that efficiently enables and satisfies their customers thus transforming the country to be placed. However, this is a strategic insight and analysis of Spark New Zealand Limited. The firm’s product, industry and Spark’s competitor’s analysis and market strategy assessment is undertaken while identifying key strategic issues for Spark. Spark is facing strategic issues attributed to their marketing strategy. Spark risk being overwhelmed by its competitors, minimizing its revenues and their gross margins. Spark faces risk caused by regulation changes as it will hinder its operations. The recommendations made include; ensure that Sparks’ services and products portfolio are simplified, introduce new digitized proposition such as customer self-service and move customers to mobile network or fiber network to ensure the improvement of performance and reliability.
Introduction
Spark New Zealand Limited is a company that offers telecommunication and ICT service in Australia and New Zealand. Its headquarters is based in Wellington, New Zealand. Additionally, Spark offers voice and data, internet, fixed-line and mobile phones calling services (“Marketing key to Spark’s broadband revival,” n.d.). The firm service provision is at international, national and local level dealing in data and internet provision services, value-added telephone services, and mobile services. Moreover, the firm provides IT consultation, implementation and also procurement, selling of equipment as well as installation services and lease services. The firm provides its services in form of Gen-i and Xtra brand names (“Our industry,” n.d.). With digital technology being the stronghold of New Zealand’s economy and social well-being, it can substantially impact country’s economy and social welfare by facilitating a stronger, more safe and connected communities including those in remote rural areas, Spark has taken an active role in opening these for everyone in New Zealand and Australia despite their socio-economic status and has also improved health for the New Zealand people (“Our industry,” n.d.). Despite steep competition from other Kiwi companies, Spark Company has prospered becoming smarter day by day as it continues to harness all the advantages of the new technology advancements such as the internet provision and cloud services. Spark Company’s success is attributed to and dependent on its customers in their main market, New Zealand (“Marketing key to Spark’s broadband revival,” n.d.). And for that reason, the company is passionate and focused on utilizing technology that efficiently enables and satisfies their customers thus transforming the country to be placed. However, this is paper is a strategic insight and analysis of Spark New Zealand limited.
Firm Characteristics
Spark New Zealand has first-class digital services capacity and strongest networks. The firm has, therefore, had data analytics abilities that will facilitate the understanding of their customers better than their competitors and enable them to interact with them in the most suitable ways that are convenient to them (“SPARK_ESG_Report_2017.pdf,” n.d.). The firm focuses on investing in people’s capabilities via means of talent acquisition as well as programs development. Additionally, the firm also lays its focus on the digital capability by information technological systems re-engineering which is the main program which has resulted in the migration of several customer records from legacy platforms to efficient digitized customer management tools.
Spark has a small though focuses on new ventures portfolio attracting new customers. Spark operates its business in a tough and highly competitive industry and therefore has its unique and bold aspirations (“SPARK_ESG_Report_2018.pdf,” n.d.-a). The company believes in its expertise and extensive capability necessary for to achieve its success. The firm’s leadership squad is energized and has high capabilities to ensure success. These leaders have a solid history of successful managerial executions that have enhanced the success of the company. With regards to its market, the company has a clear consideration of market dynamics, capable of identifying opportunities and foresees anticipated risks (“SPARK_ESG_Report_2017.pdf,” n.d.). Spark has a robust suite of assets involving strong balance sheet, portfolio brands, strong partnerships, and market scales, cash flow, digital services capacity and an effective organizational culture.
Moreover, Spark is committed to be environmentally aware, producing environmentally friendly products and ensure that it remains to be a low-carbon business (“2015_Annual_Report.pdf,” n.d.-a). Spark’s structure is aligned around customer-facing business units, enhanced by digital technologies, lean corporate facility and also infrastructure-centered resources. The company also has strong and effective governance made up of a board that plays a significant role to manage and control the strategic directions of the company and ensures appropriate strategic programs are established and implemented.
1.2 Product characteristics
Spark Company is the second largest company by market share in as a mobile operator behind Vodafone. Spark Ultra Mobile’s telecom network is referred to as XT and it is operating at 850 MHz and 3G data connection countrywide (“Marketing key to Spark’s broadband revival,” n.d.). Spark is a broadband provider, offering Asymmetric, Digital Subscriber Line (ADSL), Fibre To The Premises (FTTP) and the Very-high-bit-rate Digital Subscriber Line (VDSL) (“Our industry,” n.d.). All these broadband provide limited and unlimited data plans. Limited data plan customer has the opportunity to a choice whether to pay more per GB or rather get their speed reduced to 128kbit/s for free once they have exceeded the data limit. However, unlimited plans do not have data caps
Spark has generally made significant advancement in their products. The firm provides, Spark Home Mobile and Business thus providing New Zealand residents with incredible digital services, advanced and strong broadband and mobile services which have enabled the firm to attain increased revenue and EBITDA (“Our industry,” n.d.). Nonetheless, Spark Digital has repositioned itself and built an extraordinary data center; which include ICT and Cloud capacity which facilitates New Zealand businesses making them attain their own ambitions. Significantly, Cloud-based services usage as increase making a substantial decline of legacy IT services (“2015_Annual_Report.pdf,” n.d.-a). The firm has launched a Digital First Program which intends to transform the firm into a better, more productive company and with a superb customer experience. However, Spark New Zealand is already in the future due to its extraordinary advance new products such as Spark Apps, Lightbox, Morepork and the improvised digital customer service channels exemplifying Digital First.
1.3 Industry Analysis
In New Zealand, Spark is the biggest fixed phone lines and internet suppliers. Spark’s market account for about half the total New Zealand’s market with a population of approximately 700,000 customers that user Spark broadband, and with Skinny included, it is as well the largest mobile provider in New Zealand (“Data Analytics New Zealand,” n.d.). Though located on a small and isolated island significantly occupied by strange birds and sheep, Spark still enables the people of New Zealand to connect and interact with other people across the world.
Statistics
It is estimated that there are approximately 2,000,000 dial-up and broadband connectivity in New Zealand, below 4,000,000 mobile internet connectivity (“SPARK_ESG_Report_2018.pdf,” n.d.-a). This is a good number of users for a country with a small population of 4,700,000 people (“SPARK_ESG_Report_2018.pdf,” n.d.-b).
Industry structure
Spark provides high-quality broadband connection and other services to businesses and homes across New Zealand. When it comes to mobile services, Spark among the major 3 mobile network providers all competing for customers in their own networks, using radio spectrum authorized and awarded the license by the government (“Data Analytics New Zealand,” n.d.). In some instances, the Spark co-locates their electronic equipment on cell towers belonging to other mobile services operators. For example, this situation has occurred in a majority of the brand new towers erected in the Government’s Rural Broadband Initiative in order to enhance broadband services in remote locations.
1.4. Market and Competitors analysis
The industry structure is totally different for fixed services offered over copper or fiber lines. Wholesale companies own local line networks which have to be discrete from retailers such as Spark providing customer service (“2015_Annual_Report.pdf,” n.d.-b). In essence, it is just like the train tracks are owned and maintained by the network companies whereas Spark runs and manage the trains on these tracks (“Our industry,” n.d.). Chorus owns the national copper line network whereas the fiber network is built in form of the Ultra-Fast Broadband in cities and big towns sponsored by the government and four different companies whereby every company has the monopoly in their area. Ultrafast Fibre is accountable for Hamilton including Taranaki, Whanganui and Waikato towns.
Local fiber firms such as Chorus are entitled to ensure the provision of the equal access to their networks while their charges being equal to that of Spark or other broadband providers. The New Zealand law has set and applied these prices and terms of operations amounting to half the cost of a fixed broadband plan (“SPARK_ESG_Report_2018.pdf,” n.d.-a). They are as well accountable for installation of fiber in businesses or homes when customers’ makes a request with Spark.
Spark facilitate the transmission of data, information and voice traffic from end user to another intended end user across their own main data network across New Zealand and through international internet cables when transmitting data to other parts of the World (“SPARK_ESG_Report_2017.pdf,” n.d.). Spark has invested in some of the international cables such as Southern Cross Cable system connecting New Zealand, Australia, and the United States. Spark also has invested in the new Tasman Global Access cable that is under construction to additional add up to the internal linkage to Australia.
The telecommunication industry is highly regulated in New Zealand and is overseen by the Commerce Commission. Telecommunication companies are regulated and needed to pay a mandatory Annual Telecommunication Development Levy that is utilized for the payment of the improvement telecommunications infrastructure for New Zealand. This telecommunication infrastructure improvement is focused mainly in rural area disadvantaged. The Levey presently is $, 50,000,000 annually, and Spark share is about $ 19,000,000 (“Our industry,” n.d.).
1.5 Market Strategy
Spark’s market strategy is digital marketing and multi-band marketing. The company uses digital technologies to market its products and services as well as marketing its multiple products at the same time. The people of New Zealand are flexible and fast to adopt new emerging technological advancement and embrace new services (“Our industry,” n.d.). New Zealand has among the top countries with the highest smartphone users, using them for shopping, seeking business services and banking services. Mobile data usage is anticipated to increase seven times by 2019.
As from 2015, online streaming of television services such as Lightbox became popular resulting in a 30% increase in home broadband data use and has now accelerated to 48 GB monthly per subscriber (“Our industry,” n.d.). Mobile data use is at the moment doubling the record for last year; it is literally at an average of 390MB per connection on a monthly basis. To achieve the desires of its data-thirsty consumers, it has resulted in an increase in the investment. Projects such as UltraFast Broadband as well as 4G mobile technology are contributing to the investment record of $ 1,770,000,000 annually, which is the second largest rate in OECD (“SPARK_ESG_Report_2017.pdf,” n.d.).
Speeds
In terms of download speed, the 4G mobiles in New Zealand are one of the fastest worldwide and the broadband speeds are gradually increasing (“SPARK_ESG_Report_2018.pdf,” n.d.-a). Spark’s competitors such as Akamai data Provider Company has recorded a mean broadband downloading speed of 9.3Mbps in New Zealand while TrueNet has claimed that download speeds are often probable to slow down at peak hours.
Pricing
Telecommunication services are very competitively priced. Regardless of all household expenditure, charges and expenses of the consumer telecommunications have decreased. Mobile services charges have declined too by 46% since 2014 (“Our industry,” n.d.). In New Zealand, the cost of voice calls together with data monthly bundles, either broadband or mobile is cheap as compared to the OECD average, and also each first time customer now receives extra data than earlier before.
Contribution to the economy
Essentially, telecommunication is the sector of significant innovation and growth. The ICT section is determined to be growing at the rate of more than 9% per annum and at the moment it is accounting for $3.09 billion of New Zealand’s GDP (“Marketing key to Spark’s broadband revival,” n.d.). Ultrafast Broadband, which has 99% of the population of New Zealand receiving 100Mbs downloads speed while the Rural Broadband Initiative receiving a 5Mbps speed at peak hours for people outside the UltraFast Broadband coverage are anticipating a GDP growth of $5.5 billion over the next 20 years (“SPARK_ESG_Report_2018.pdf,” n.d.-b).
Conclusion
Spark is facing strategic issues attributed to their marketing strategy. In essence, since their marketing strategy and their operation strategies seems to be less effective they are not able to meet customer standards standard, Spark risk being overwhelmed by its competitors, minimizing its revenues and their gross margins. Moreover, Spark faces risk caused by regulation changes as it will hinder its operations.
Recommendation
To overcome this risk, the following are recommendations that Spark should consider in order to manage and improve its declining market:
- Ensure that Sparks’ services and products portfolio are simplified. Simplifying and digitizing business programs will help to minimize the firm’s operation cost. This will enable spark to cope up and achieve the market pricing trends while making investments in the mobile spectrum as well as the network technology required for network leadership.
- Introduce new digitized proposition such as customer self-service
- Move customers to mobile network or fiber network to ensure the improvement of performance and reliability so as to maintain and preserve the market scale and market margin, the firm should leverage all brands so as to prosper in price-sensitive markets. Additionally, Spark should migrate a large number of its customers into a fiber and wireless-accessed technology in order to enhance customer experience.
- Spark should re-balance its multi-brand strategy to enable it to contest efficiently in markets with sensitive prices. Simplifying and digitizing business programs will help to minimize the firm’s operation cost. This will enable spark to cope up and achieve the market pricing trends while making investments in the mobile spectrum as well as the network technology required for network leadership.
- Spark should mitigate regulatory risks by using mutual engagements with relevant stakeholders, the government and the regulators so as to generate mitigate strategies to these risks as they arise
- To maintain and preserve the market scale and market margin, the firm should leverage all brands so as to prosper in price-sensitive markets.
- Spark should continue with investing in technological developments that minimize the per unit data cost. Such kind of investments entails establishing an Optical Transport together with Carrier Ethernet networks. When finished, the Converged Communications Network shall incorporate medial traffic, voice, and data through all access channels at minimal and affordable costs as compared to legacy platforms.
Findings and discussion
IT services
The capacity of Sparks to make improvements on the way they deliver their IT services and margin is essential in attaining the sustainable revenues. By ensuring that its products and clarification portfolios, service offers and applying the new the new Spark management process enabling the firm to be in a position to attain its objectives. Extensive implementation of Cloud businesses enables the organization to grow
Broadband
The market scope and margins of Sparks can be taken over by other aggressive competitors providing the same products and services. To maintain and preserve the market scale and market margin, the firm should leverage all brands so as to prosper in price-sensitive markets. Additionally, Spark should migrate a large number of its customers into a fiber and wireless-accessed technology in order to enhance customer experience.
Mobile
An intensified competition can lead to the proliferation of offers that declines the value of the market. Such products pressurize mobile markets of New Zealand. Therefore, Spark should re-balance its multi-brand strategy to enable it to contest efficiently in markets with sensitive prices. Simplifying and digitizing business programs will help to minimize the firm’s operation cost. This will enable spark to cope up and achieve the market pricing trends while making investments in the mobile spectrum as well as the network technology required for network leadership.
Monetizing incremental broadband data growth
Competition from unlimited broadband propositions and prices can prevent economical sustainability of Spark’s operation. For Spark to overcome this issue, it should continue with investing in technological developments that minimize the per unit data cost. Such kind of investments entails establishing an Optical Transport together with Carrier Ethernet networks. When finished, the Converged Communications Network shall incorporate medial traffic, voice, and data through all access channels at minimal and affordable costs as compared to legacy platforms.
Regulatory
Regulatory changes are capable of impacting Spark’s earning levels and its achievements. In case of a review of the Telecommunication Act, it can grant powers to the Commerce Commission for monitoring and enforcing minimal customer service standards. Moreover, it may recommend critical changes in order to conform to the amendments in the act. Spark should, therefore, mitigate regulatory risks by using mutual engagements with relevant stakeholders, the government and the regulators so as to generate mitigate strategies to these risks as they arise.