One NZ and 2degrees: How Vodafone’s Exit Reshaped a Three-Player Mobile Market

One NZ and 2degrees show what happens to a telecom market when global operators leave and long-term financial owners take their place. This article explains how Vodafone came to sell its New Zealand arm, how Infratil took full control, how a start-up backed by a Māori spectrum trust broke a duopoly, and why three networks in a country of five million people still worry the Commerce Commission. It is part of the New Zealand Company Stories hub.

How did One NZ begin?

One NZ began as BellSouth New Zealand, which launched the country’s first competing mobile network in 1993. Vodafone bought it in November 1998, when it had 138,000 customers, and built it into the largest mobile operator in the country over the following decade.

For most of the 2000s New Zealand mobile was a duopoly between Vodafone and Telecom. Vodafone had the better technology, having chosen the GSM standard while Telecom ran an incompatible CDMA network, and it took the lead in customers. It then tried to become a full-service competitor to Telecom in fixed lines too. It bought the internet provider ihug in October 2006 and, in October 2012, paid NZ$840m for TelstraClear, the country’s second fixed network with its own cable assets in Wellington and Christchurch.

The fixed business never earned the returns of mobile. A proposed merger with the pay-television company Sky was blocked by the Commerce Commission in 2017, and by 2018 the parent group, under pressure to cut debt in Europe, was looking for an exit. The appointment of Jason Paris as chief executive in mid-2018 signalled a move towards local autonomy and, soon after, local ownership.

Why did Vodafone sell its New Zealand business?

Vodafone sold because New Zealand was a small, distant market that consumed capital its parent needed elsewhere. In May 2019 Vodafone Group agreed to sell the business to Infratil and Brookfield Asset Management for NZ$3.4bn, completing the deal on 31 July 2019.

Each buyer put in about NZ$1bn of equity for just under half the company, with the remainder funded by debt at the operating company and a small stake reserved for management. The business kept the Vodafone name under a multi-year partner market agreement that also preserved roaming and procurement benefits. The thesis was simple: a telecom operator run for a global group’s convenience could be made more profitable by owners who cared about nothing else. Legacy IT systems inherited from several acquisitions were the obvious target.

The new owners moved quickly to release capital. In 2022 the passive mobile towers were sold for about NZ$1.7bn into a separate company now called Fortysouth, backed by infrastructure funds, mirroring what Spark did with its towers in the same year. The Vodafone brand was dropped on 3 April 2023 in favour of One NZ, at a rebranding cost of about NZ$28m, and the company announced a partnership with SpaceX to use Starlink satellites for mobile coverage.

How did Infratil take full control?

Infratil took control in June 2023 by buying Brookfield’s 49.95% stake for NZ$1.8bn, lifting its ownership to 99.9%. The deal implied an enterprise value of NZ$5.9bn and was funded with NZ$850m of new Infratil shares plus cash and debt.

The timing reflected the two partners’ different horizons. Brookfield’s fund wanted to realise a gain after four years; Infratil, a permanent-capital vehicle, wanted more of an asset it knew well. One NZ’s EBITDA had risen 9.7% to NZ$528m in the year to March 2023, and guidance for the following year was NZ$580m-620m. The transaction made One NZ one of the two largest holdings in Infratil’s portfolio alongside its data centre business, a story told in the article on Infratil, CDC and One NZ.

Full ownership has not yet delivered the earnings step-up the price implied. EBITDAF was NZ$609m in the year to March 2026, up only NZ$4m, and guidance for the following year is NZ$600m-640m. Infratil carried the investment at about NZ$3.4bn at March 2026 and reports a return of 16.5% a year since 2019, a figure flattered by the early tower sale and by leverage.

How did 2degrees break the duopoly?

2degrees broke the duopoly by entering as a third network in August 2009 with prepay prices roughly half those of the incumbents. It was built on spectrum reserved for Māori after a Treaty of Waitangi claim, and funded by overseas investors willing to wait years for a return.

The company’s origins go back to 2001, when entrepreneur Tex Edwards founded NZ Communications. Its key asset was 3G spectrum allocated to the Hautaki Trust following a 1999 claim that radio spectrum was a taonga, a treasure, protected by the Treaty. Early backing came from Econet Wireless; Trilogy International Partners, an American investor in emerging-market telcos, took a controlling stake in 2008. The role of iwi interests in the venture is part of the wider picture described in the article on the Māori economy and iwi corporations.

Launch day, 4 August 2009, changed pricing overnight. Regulation helped: the Commerce Commission later cut mobile termination rates, the fees networks charge each other to complete calls, which had protected the incumbents’ customer bases. 2degrees added 3G in 2010, 4G in 2014 and 5G in 2022, and bought the broadband provider Snap in 2015 to offer fixed services.

What it lacked was scale. After considering a stock-market listing, Trilogy sold the company to Macquarie Asset Management and Aware Super, a deal completed in May 2022, and it was merged with Vocus New Zealand, owner of Orcon and Slingshot. The combined group sold its towers to Connexa for more than NZ$1bn, the same vehicle that owns Spark’s former masts.

How do One NZ and 2degrees make money?

Both companies earn most of their margin from mobile subscriptions and sell broadband largely as a low-margin bundle. One NZ had revenue of NZ$1,998m in the year to March 2026; 2degrees reported NZ$1,385m for the year to June 2025.

One NZ’s mix shows where the profit sits. Mobile service revenue was NZ$847m, fixed and ICT NZ$527m, wholesale and other NZ$225m, and handset sales about NZ$400m at minimal margin. It had 1.98 million mobile connections, 1.36 million of them on monthly contracts paying an average of NZ$43.50, against NZ$20.30 for prepay customers. The blended average rose to NZ$36.60 from NZ$35.50, which is how the company grew earnings without growing its share. The EBITDAF margin was 30%, and capital expenditure of NZ$245m was about 12% of revenue.

2degrees is more diversified. Mobile brought in NZ$581.5m, up 4.8%; broadband NZ$432.3m, up 3.9%; and electricity retailing, inherited from the Orcon and Slingshot side, NZ$133.4m. Trading EBITDA rose 11.5% to NZ$395.3m as the merger integration finished and the two companies moved onto one technology platform. It still reported a pre-tax loss of NZ$22.6m, mainly because of non-cash movements in the value of energy contracts and interest-rate hedges, plus about NZ$10m of integration costs.

Both operators also push fixed wireless broadband, delivered over their own mobile networks, because it avoids the wholesale charge paid to the fibre owner. That tension is discussed in the article on Chorus and the regulated fibre network.

How competitive is the three-player market?

The market is more competitive than the duopoly it replaced, but the Commerce Commission still describes it as a stable three-player oligopoly. Spark, One NZ and 2degrees together hold about 97% of mobile subscribers, and their combined share has barely moved in five years.

Measures of individual share vary. Industry tracking based on devices put One NZ at 36% in early 2026, flat on the year, Spark at about 32% with a further 6% for its Skinny brand, and 2degrees at 27% after seven consecutive quarters of gains. The Commission’s subscriber-based data shows 2degrees lower, at about 22% in 2025, up from 19% in 2020. Either way the direction is the same: the third player is growing at the expense of the old leaders, which is examined from the other side in the article on Spark New Zealand.

The weakness is below the network level. Mobile virtual network operators, brands that rent capacity from a network owner, account for only about 2% of connections, against 10-20% in most OECD countries and close to 20% in Australia. Spectrum is also unevenly held: Spark and One NZ each control about a third of what is available and 2degrees about 16%. The pattern of a few large players and a regulator pressing for wholesale access echoes the findings on the supermarket duopoly and on the big four banks.

What role do satellites play?

Satellite-to-mobile service has become the main point of differentiation. One NZ launched text messaging via Starlink satellites across the whole country, which it describes as a world first for a nationwide service; Spark has followed, and 2degrees plans a service with AST SpaceMobile.

The commercial logic is coverage. New Zealand’s terrain leaves large areas, roads and coastal waters without cell towers, and reaching them with ground infrastructure is uneconomic. A phone that falls back to a satellite when no tower is in range gives an operator a claim to cover the entire country without building anything. One NZ made that claim the centre of its marketing after the 2023 rebrand, and it has helped hold its share at a time when its rivals were discounting.

The technology has also created a new competition dispute. Internet providers that resell mobile services say the network owners are keeping satellite features for their own retail brands. One NZ had indicated it would open satellite texting to virtual operators by April 2026 and then reversed that position, prompting calls for the Commerce Commission to intervene. If satellite coverage becomes a standard expectation, access to it will matter as much as access to the terrestrial network.

What do the latest numbers show?

The latest results show One NZ flat and 2degrees growing. One NZ’s EBITDAF rose less than 1% to NZ$609m in the year to March 2026, while 2degrees lifted trading EBITDA 11.5% to NZ$395.3m in the year to June 2025.

One NZ’s 5G network covered about 70% of the population at the balance date, and it had 347,000 fixed connections. A wholesale fibre unit, EonFibre, contributed roughly NZ$65m of EBITDAF in its first full year as a separately reported business. The company’s medium-term aim is capital intensity of about 11% of revenue, with FY27 capital expenditure guided at NZ$235m-265m excluding spectrum.

Leadership is changing. Jason Paris announced in mid-2026 that he would step down after nearly eight years, to be succeeded by chief financial officer Nick Judd, a former finance chief of Tourism Holdings who also spent more than 15 years at Air New Zealand. At 2degrees, chief executive Mark Callander has set a three-year growth strategy and won a contract to connect more than 2,500 schools through Network for Learning.

What can founders and CFOs learn from One NZ and 2degrees?

The two companies offer complementary lessons: 2degrees shows how a challenger enters a concentrated market with help from regulation and patient capital, and One NZ shows how a carve-out from a multinational creates value by separating assets and fixing inherited systems.

• Entry needs a scarce input. 2degrees existed because spectrum was set aside for Māori. Without a protected route to the essential asset, no amount of marketing would have built a third network.
• Price to change behaviour, then build scale. Halving prepay prices won attention, but the business only became durable after it merged with a broadband company and reached more than NZ$1bn of revenue.
• Carve-outs are won in the back office. One NZ’s upside lay in replacing systems stitched together from BellSouth, ihug and TelstraClear. That work is slow, costly and invisible to customers, and it explains why margins have risen more slowly than its owners hoped.
• Separate the asset classes. Both companies sold towers to infrastructure funds at high multiples and rented them back, releasing capital for networks and debt reduction.
• Mind the entry price. Infratil paid for Brookfield’s half at an enterprise value of NZ$5.9bn; flat earnings since then show that buying out a partner at a full price leaves little room for error.

For finance chiefs, the pair also illustrate why the same business reports different profit measures. EBITDAF, trading EBITDA and EBITDAI each exclude different items, so comparisons need care.

What happens next for One NZ and 2degrees?

The next phase will be shaped by a new chief executive at One NZ, by continued share gains at 2degrees, and by the question of what their financial owners eventually do with them. Guidance points to flat earnings at One NZ in the year to March 2027.

For One NZ the priorities are simplifying IT, using artificial intelligence to cut service costs and lifting mobile revenue per user. Infratil has other calls on its capital, above all data centres, and has shown it will sell assets when the price is right, so a partial sale or listing of One NZ or of its fibre unit remains possible over time. For 2degrees, owners who bought in 2022 will at some point want to realise their investment, and the options are a listing, a sale to another fund or a combination with another operator.

Regulation will set the boundaries. The Commerce Commission has made reducing concentration its priority in telecommunications, and it is watching wholesale access for virtual operators and the satellite dispute closely. A market that moved from two players to three in 2009 is unlikely to be allowed to move back.

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