Broadband plan big opening for Vector

The Government's billion-dollar broadband fibre network roll-out is a bright light for the future, says listed lines company Vector.

Speaking at the company's annual meeting, chairman Michael Stiassny said the company expected conditions to be tough this financial year but counted the Government's fibre initiative as a major opportunity.

Communications and IT Minister Steven Joyce this week released an invitation to participate in its $1.5 billion fibre network build aimed at bringing ultra-fast broadband to 75 per cent of the population within 10 years.

Vector chief executive Simon Mackenzie said the company was a strong contender to be part of the country's fibre solution, provided it made commercial sense.

"New Zealand cannot find itself in seven years still relying on legacy networks when the rest of the world has moved on to fibre," said Mackenzie.

Vector's Auckland fibre network has Vodafone as a cornerstone customer and is accessible to more than 10,000 businesses.

Mackenzie said the details contained in this week's Government announcement reflected the company's discussions with the Government.

"It's positive recognition that [the Government] wants a new infrastructure platform where any retailer or service provider can provide their solution to customers directly."

He said the company's experience in operating regulated, monopoly-style networks unencumbered with a retailing arm played to Vector's strengths.

Telecom, which is ineligible for Government investment because it owns a retail business, has had several meetings with both Joyce and the Prime Minister John Key in the past week.

Mackenzie said this was completely understandable and that Vector had also met the minister and officials.

"But now there is a formal process that has to stop," said Mackenzie.

Subdued consumer and business activity affected the company, according to data released yesterday.

Warm, wet weather saw electricity volumes down by 1.4 per cent compared with the same time last year, with gas volumes up 0.6 per cent.

Electricity connections were flat, with gas connections up 0.4 per cent on the previous quarter but slightly down on the same period last year.

"Looking forward we still see a flat kind of environment," said Mackenzie.

In August Vector reported a 16.3 per cent rise in net profit from continuing operations to $164.9 million for the year to June 30.

This excluded the sale of its Wellington network in July last year, which if included, boosted net profit to $370 million.

Revenue from continuing operations dropped to $1.17 billion from $1.18 billion, while earnings before interest, tax, depreciation and amortisation (ebitda) from continuing operations rose 6.3 per cent to $582.2 million.

Its full-year dividend was up from 13.25c to 13.75c, with 300,000 Auckland power customers benefiting from a $320 payout via the trust which is Vector's main shareholder.

Stiassny said the company was not happy with how low its share price had been trading.

Its shares closed yesterday at $2.00, but had traded as high as $2.31 earlier in the year.

He said it reflected investors' return to riskier stocks as sentiment improved.

Stiassny said the slower economic conditions had meant no bonuses or pay rises for its directors and the majority of staff.