Telecom nears turning point - Reynolds

Paul Reynolds delivered 'outstanding performance' in a challenging year, according to the Telecom board. Photo / Steven McNicholl

Telecom is approaching a turnaround point, chief executive Paul Reynolds says.

Speaking to more than 300 shareholders at the company's annual meeting in Auckland yesterday, Reynolds said the challenges Telecom had faced over the past year had been "immensely complex".

He likened the tasks undertaken by the company to that of a jumbo jet crew having to change the wings, service the engine and repaint the fuselage while in mid-flight, all while having to keep passengers and air-traffic control happy.

"It's a combination of tasks no other telecommunications company, anywhere in the world, has had to grapple with."

Despite the challenges, Reynolds said, the company had met its financial guidance and was maintaining guidance that its adjusted earnings before interest, tax, depreciation and amortisation (ebitda) for this financial year would be between 1 per cent less and 2 per cent more than last year.

"We are approaching the point of turnaround after a period of negative growth consequent on the massive regulatory changes and increased competition we have seen since 2007."

Reynolds said the company had signed up more than 200,000 customers to its new mobile network XT since its launch on May 29 and installed more 1000 roadside cabinets as part of its commitment to deliver speeds of 10 to 20 megabits per second broadband to at least 80 per cent of New Zealand lines.

It was committed to the Government's vision of fibre to the home for 75 per cent of New Zealanders in the next 10 years.

But Reynolds said Telecom believed a national approach which leveraged the investment already in place would be better.

"We remain in discussions with the Government on this matter."

Reynolds said Telecom's focus for this year would be on selling the products and services based on the platforms it had developed.

But he emphasised that to get it right the company also had to be "allowed" to get it right, pointing to the need for more regulatory change.

Reynolds said investment in the sector was at an all-time high but at the same time profits were being squeezed.

"It's precisely because of these dynamics that we need regulatory certainty and fairness, to help preserve the momentum of investment."

Meanwhile, chairman Wayne Boyd headed off any questions over Reynolds' pay early in the meeting.

"I am aware that there has been disquiet amongst some of you regarding remuneration of our executives, in particular our chief executive Paul Reynolds."

Boyd said the board considered Reynolds had delivered "outstanding performance" in what had been a very challenging year for the company.

The annual report released in August revealed Reynolds would receive his full performance bonus despite a fall in profits for the company, resulting in a total package of more than $5 million - the highest pay ever for a New Zealand executive.

Boyd said he was confident Reynolds' pay was an appropriate reflection of his international experience and value and described it as conservative for the telecommunications sector.

He said Reynolds' pay was linked to long-term performance of the company and both his short- and long-term incentives were at risk, which meant if he did not meet performance targets he could miss out.

The board had recently assessed whether Reynolds had met his targets to be able to maintain 134,000 share rights worth $583,000 but he had failed to meet the hurdles, which meant those rights would lapse and he would not receive any value.

Boyd said Reynolds had delivered on his targets of financial performance for ebitda and capital expenditure and had lifted customer satisfaction levels - a factor that was measured through independent surveys.

Reynolds had also built strong relationships with customers and provided leadership to 8000 staff.

Boyd himself received a vote of confidence, being re-elected to the chairmanship yesterday, while director Ron Spithill was also re-elected.

New director, Japanese telco expert Sachio Semmoto, was also voted on to the board but, as expected, self-nominated Hamilton doctor Tim Rooke did not make the cut.

Telecom's share price closed up 4c to $2.70.