2degrees CEO Mark Callander. Photo / Michael Craig
Telecommunications company 2degrees made a net loss attributable to shareholders of $18.2 million for its 2025 financial year (ending June 30), from the prior year’s $3.1m net loss.
The privately held telco said its wider net loss “was largely driven by non-cash valuation impacts and one-off integration costs. For example, the fair-value changes in energy contracts and loan hedging reduced NPBT [net profit before tax] by $45.9m year-on-year”.
But operating earnings and overall revenue, plus revenue in key product categories such as mobile, broadband and energy, were up.
The gains came despite “economic headwinds”, chief executive Mark Callander told the Herald.
“Like our competitors, we see consumer household spending slowing down. Small businesses are struggling out there. So our results aren’t immune to that. However, we have continued to grow share.”
The Commerce Commission’s most recent Telecommunications Monitoring Report, released in June, said 2degrees was the only telco to increase market share.
Callander added: “There are some green shoots out there. We’re very confident that in the second half of this financial year, we’ll see some positive stuff happening.”
The telco said “trading ebitda” (earnings before interest, taxes, depreciation and amortisation, adjusted for one-offs) rose by 11.5% or $40.7m year-on-year to $395.3m.
Mobile revenue increased 4.8% year-on-year to $581.5m from $555.0m in the prior year, 2degrees says.
Broadband revenue grew 3.9% year-on-year to $432.3m, up from $415.9m in 2024.
Energy revenue saw a rise of 8.7% year-on-year to $133.4m from $122.7m.
Net cash from operating activities rose from $169.4m to $237.3m.
A spokeswoman said staff numbers had reduced from 1507 on June 30, 2024 to 1465 on June 30, 2025 as a three-year 2degrees-Orcon integration wrapped up and “business simplification” measures were introduced.
It was a blip next to Spark’s cull of 1300 staff over the same period as it reduced its headcount to 4043.
2degrees’ initial strength was in consumer and small business, but lately it’s been winning more contracts a the big end of town.
A signature win saw 2degrees oust incumbent Spark for a Government contract – beginning in March this year and running through to 2031 – for a contract to supply services to 2542 schools.
Callander said his firm also had “big mobile wins” at corporates including Datacom, Ventia and Transpower.
It was 2degrees’ third full year of financials following its merger with Vocus NZ.
A complex deal saw Vocus NZ (trading as Orcon) sold by Australian-based Vocus Group to Voyage, a joint venture between investment bank Macquarie and Aware Super. Voyage, in turn, bought 2degrees, with the two businesses folded into each other on terms finalised in mid-2022.
Although it was essentially Orcon, run by Callander, buying 2degrees – thanks to its new backers’ deep pockets – the merged entity has traded as 2degrees.
A giant, three-year upgrade project called “Tahi” has just wrapped up. It saw two million customers move from a Big Tech firm’s systems to a platform developed in-house (that is, migrating the old 2degrees customers to the Orcon/Vocus way of doing things). Callander said it was a trade-off as in-house development costs rose but his firm freed itself from high licensing fees.
He said a key payoff was more flexibility, which has helped 2degrees win more corporate business as it was now able to offer customised services more quickly.
Rivals have accused 2degrees of dropping its pants to win business. Callander told the Herald that in the bidding for a contract covering 3000 business mobiles, his company actually had the most expensive pricing in the first round of the tender, and was second-placed on price in round two. He said 2degrees prevailed because of its Flex custom-built self-service portal, enabling fleet management, while rivals had to employ third-party software to offer the same features.
Spark is poised to add a mobile-to-satellite service in the New Year. The telco has yet to name its partner, other than saying it is a US-based firm. Insiders say the telco will become Starlink’s second local partner, after One NZ.
2degrees earlier said that it would go with a Starlink alternative, AST, part-funded by One NZ’s former owner, Vodafone. AST has fewer satellites but they are higher up for broader coverage.
Callander said the key point of difference will be that 2degrees’ AST-based service will offer voice, data and text from the get-go. One NZ’s service is text-only, but with voice and data promised to follow – by year’s end – as Starlink launches more of its direct to cell-compatible second-generation satellites.
The 2degrees’ boss wouldn’t be pinned to a launch date other than “next year”. Work on ground infrastructure is under way, he told the Herald. (Although it’s doing mobile-to-satellite business with AST, 2degrees does have Starlink ties. It wholesales the business version of Starlink’s dish-based service. And via its inherited Vocus business, 2degrees also runs four Starlink ground stations in New Zealand.)
2degrees bundles power with its plans (thanks to Orcon buying a power retailer, Switch Utilities, in 2016) and has recently joined Consumer NZ, the Employers and Manufacturers Association and others in a call for the big “gentailers” to be broken up – a move Callander said would be akin to Telcom’s break-up into wholesale (Chorus) and retail (Spark) businesess.
Callander called competition between the four big gentailers a “cosy pillow fight” that, in his view, enabled high prices, “very happy shareholders with big dividends and an infrastructure deficit”. (The gentailers say proposed reforms would actually reduce investment, driving up power prices.)
Does he feel the open letter he co-signed to Prime Minister Christopher Luxon, and other measures, are having cut-through?
“Yeah, we do have positive expectations of change,” Callander said.
“We expect something out before the end of this month.
“The ministers have been very good to deal with.
“I think there is wide recognition that the market structure is broken.
“The Government’s got this delicate balance between security of supply, obviously, and the pain that households are feeling and policy settings that aren’t working. But we expect significant change.”
Spark saw a 9% net profit fall to $316m in the year to June as its revenue shrank 3% to $3.73b.
Chorus swung back into the black for the same period with a $4m net profit from its prior-year net loss of $9m as revenue increased $4m to $1.01b.
One NZ, now 100% owned by Infratil, reported ebitdaf (earnings before interest, taxes, depreciation, amortisation and fair value adjustments) for the year to March 31 of $604.8m from last year’s $600.0m, “despite a challenging economic backdrop” on revenue that fell from $1.99 billion to $1.92b.
Read full Mood of the Boardroom coverage here.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.