2degrees lifts profit 33% in 2017 on increased revenue and tax credits

Stewart Sherriff, chief executive of 2degrees. Photo / File

Telecommunications provider Two Degrees Mobile lifted net profit 33 per cent in 2017, with revenue gains outpacing costs and the bottom line boosted by tax credits.

Net profit rose to $19 million in the year ended December 31, from $14.3m in 2016, on a 4.3 per cent revenue gain to $732.7m. Expenses excluding finance costs rose 4.1 per cent to $665.4m, while the company cut finance costs 10.5 per cent to $25.8m in the year.

Two Degrees benefited from a $1.5m income tax credit in 2017, compared to a $4m credit a year earlier when it posted its first profit.

Between establishment in 2009 and the end of 2015, the company clocked up accumulated losses of $396.8m as it invested heavily in a national mobile network and moved into fixed line telephone and broadband services to allow it to compete across the full range of telecommunications services.

By the end of 2017, its 4G coverage reached 96 per cent of the population, up from 79 per cent in the prior year, the company said.

"The results for 2017 were impacted by the introduction of a new business support system in February 2017," a spokesperson said.

"This created service challenges that impacted sales activity and subsequent revenue growth. The situation has since been resolved."

The company reported a $2.3m gain on foreign exchange rate movements in the year, up from $862,000 in 2016.

Major shareholder Trilogy International Partners, a Toronto Stock Exchange-listed company which owns 73.2 per cent of Two Degrees, said in a first-quarter release published on May 5 that the business added 5,100 net postpaid subscribers as at March 31, lifting numbers to 401,200.

It dropped a net 42,500 prepaid subscribers in the quarter, bringing that number to 982,600.

However, its postpaid customers are more valuable, bringing in an average of US$36.32 ($52.01) per user per month compared to US$7.98 for prepaid customers.

Trilogy also said Two Degrees' revenue rose 14 per cent in the first quarter of 2018, driven by advertising to sell more handsets and higher-priced, new models.