Investment banker Goldman Sachs JB Were (GSJW) has labelled the New Zealand mobile market "immature" and the efforts of virtual network operators so far as "impotent".
A research note published on Tuesday says Telecom and Vodafone remain New Zealand's only mobile network operators and the launch of New Zealand Communications appears to have been deferred.
GSJW's Tristan Joll writes there has been little progress since the firm's last report on the New Zealand wireless market earlier this year.
Despite barriers "we anticipated that 2008 would be a year of change in the wireless market with the unification of carrier technologies through Telecom's GSM/WCDMA build and potential disruption by third entrant New Zealand Communications.
"Six months on, we have reviewed these assumptions and found relatively slow progress," the note says.
The analyst also appears unimpressed with TelstraClear's reentry into the mobile market, describing it as a fixed-line acquisition and retention strategy.
"Shaping our view of market dynamics in calendar year 08 was the expectation that New Zealand would experience the introduction of a third, network-based mobile player, at least three MVNOs and the resurrection of fixed player TelstraClear's wholesale offering," Joll writes.
"Of these only one (the TelstraClear re-launch) has occurred thus far and, on face value, this appears to have limited disruptive potential."
Of the potential mobile virtual network operators, GSJW finds Orcon the most credible.
"Although we consider Orcon (who signed an initial heads of agreement with Vodafone in August 2006) to be the most credible player in this space we remain extremely sceptical as to the degree of influence such players will have on market dynamics due to their dependence on favourable agreement terms from host network providers.
"This is compounded by international experience which suggests that, even with favourable regulatory conditions, market maturity and brand barriers have limited returns for MVNO entrants."
However, there is hope for progress next year, the analyst finds.
"Adding to regulatory pressure from recent roaming and co-location decisions, the Commerce Commission is examining mobile termination rates. We expect this is likely to yield a full blown determination process and entrant-friendly outcome sometime in 2009."
In addition, Telecom is struggling n a slowing market and its wireless performance is "consistently poor".
"We attribute this primarily to limitations of its CDMA technology, along with continued reluctance to disturb established fixed line revenues," the analyst writes, adding that mobile transformation is Telecom's most important non-regulatory work programme.
Despite that, GSJW rates Telecom a "hold" stock as it is trading at a "rational discount to valuation".