Back to basics says Telecom chief

By PETER GRIFFIN and AGENCIES

Telecom chief executive Theresa Gattung promised a back-to-basics focus on earnings growth yesterday as she and her management team went all out to convince analysts that the multibillion-dollar transtasman business is in good shape.

A briefing day for Australian analysts in Sydney laid the cards on the table, Telecom stifling rumours that Australian unit AAPT is about to be put on the block.

Corporate affairs manager Philip King said the speculation probably arose in the wake of David Bedford's departure as head of AAPT. Chief financial officer Marko Bogoievski has taken over the role temporarily.

"[The speculation] isn't true - David had been keen to return home," said King.

Gattung said in briefing notes that boosting cashflow and paying back debt were key objectives for Telecom.

"Earnings per share growth is what counts," she said, adding that Telecom was not a utility.

"There are growth levers, but [we] have to be realistic about them."

In his own briefing, Bogoievski said "churn" in the telco's Australian consumer and business units remained too high.

Churn relates to reductions in previously signed customers over a given period.

Bogoievski said the market had decided AAPT Australian operations had made executional rather than strategic headway and that its top revenue line had struggled during restructuring of the business.

The unit's competitive position had potentially been eroded because of the ability of competitors Telstra and Optus to bundle residential telecom services with pay TV services. AAPT planned to launch its own pay TV offering soon.

Bogoievski added that the incumbents remained vulnerable to rival internet protocol-based and alternative access technologies - just as Telecom does in New Zealand.

The general manager of AAPT consumer business, Greg Armstrong, said the customer base had stabilised after dropping 24 per cent as low-value subscribers were hit with price rises.

Customer losses, which had been as high as 28,000 a month, were now running at about 19,000 a month. A major effort to slow churn rates was underway.

AAPT's managers talked about the "turnaround" in the company, which saw the elimination of "three layers of sales management", a 25 per cent reduction in the retail AAPT workforce.

AAPT Mobile was negotiating a distribution agreement to re-sell Hutchison's much-anticipated 3G services when it launched. AAPT's internet provider, Connect, would also look to begin offering broadband services this month - finally bringing a product to market long after its competitors.