KEY POINTS:
The idea that Paul Reynolds would sweep in to the hallowed halls of Telecom as the great Scottish redeemer was so compelling that it has been easy to form an overly optimistic view of Telecom's future.
With a fresh management team, an embracing of the regulatory regime, a
few fresh ideas and a canny eye for cost savings, Telecom was ready to roll once more. Right?
Well nothing is quite that simple. And so the numbers proved.
Any doubts about the size of the challenge facing Telecom were swept away by yesterday's ugly six month results.
It wasn't just the size of the loss - largely anticipated by the market and inflated by last year's sale of the Yellow Pages - it was where the losses were coming from.
There was an 8 per cent decline in ebitda (earnings before interest, tax, depreciation and amortisation) from New Zealand operations. So much for the home advantage.
Australia hasn't exactly come right either - with any sign of positive cashflow from the merger of Powertel and AAPT still some way off.
Costs were up overall and mobile revenue - where Telecom had been starting to make ground - was also down about 3 per cent for the second quarter.
Reynolds did a pretty good job of explaining some of this.
He made the point that the emphasis in the mobile war was on signing up new customers. Cut-throat competition meant those customers were not generating big revenue gains now but the hope was to move them on to more lucrative premium services as the new technology came on stream.
His tone remains calm and assured. In some areas the company had performed well, he said. In other areas "new effort and momentum is required".
That's corporate code for: "I know it looks bad but I'm doing something about it."
Reynolds will be far from happy with this result. Telecom's middle management better be ready for a big shake-up because he sounds fired up.
"A transformation is under way. We have made decisions about leadership, structure and focus that will help to secure future momentum for Telecom New Zealand, based on a relentless focus on our customers."
But that wasn't enough to excite the market. In fact as tone-setter for the results season the result was lousy.
Telecom's market dive drove the NZX to briefly touch a fresh low for the year.
* Liam Dann is Business Herald editor.