KEY POINTS:
Telecom today announced a better than expected profit today but it's been a tough year for the company.
Business challenges:
Last November the government announced major changes to how the company operates its business.
The Telecommunications Amendment Bill unveiled by the Finance and Expenditure select committee forced
operational separation of the company into three parts - a network access arm, wholesale arm and retail arm.
Price crash:
The share price began 2006 at just over six dollar but reached a low of $3.95 in August last year. It has since recovered and on January 29 reached $5.14.
Truth serum:
Telecom CEO Theresa Gattung confirmed what many consumers already knew, telling analysts in March last year that incumbents such as Telecom and their competitors use consumer confusion as a marketing tool.
"Think about pricing. What has every telco in the world done in the past? It's used confusion as its chief marketing tool, and that's fine."
Leaks:
Government plans to force Telecom to open its network to competitors were leaked to Telecom within hours of being signed off by a top-level Cabinet committee last May.
The leak forced the Government into an early announcement of plans which were intended as a budget centrepiece.
Changes at the top:
Rod Deane announced he will step down as chairman of the company he joined as chief executive in late 1992. Auckland Airport chairman and current Telecom board member Wayne Boyd takes over the reins as chairman in July.
Aussie woes:
Struggling Australian business AAPT announced cuts to more than 500 call centre jobs.
First quarter results in early November saw AAPT continued to struggle, with a drop in revenue of 1.7 per cent to A$292 million ($336 million), and an operational loss of A$5 million, up 33.3 per cent.
Telecom cut AAPT's value by $1.165 billion taking its worth to just $270 million as it battled falling retail prices and rising wholesale charges.
Bid boost:
This week Telecom makes a last-ditch attempt to save its struggling Australian subsidiary AAPT with a takeover bid for network company PowerTel.
The A$397 million ($445 million) bid, which could spark a takeover battle with Optus, would see Telecom add to the $2.2 billion it spent acquiring the loss-making AAPT in 1999. After a series of writedowns, Telecom now values its Australian business at just $270 million.
Telecom, which has a network access agreement with PowerTel, said it planned to pay A$2.30 a share for the company in a scheme of arrangement which as the support of the PowerTel board.
Industry observers say a merger with PowerTel is AAPT's best chance to revive its struggling business as it would give AAPT control of Australia's second largest fixed-line broadband network.
Fingers do the walking:
Indicative bids for the sale of Telecom's Yellow Pages business are due today.
Interest in the directory business is high, with Australian telephone company Telstra going up against private equity firms, believed to include Kohlberg Kravis Roberts & Co, CVC Capital Partners, The Blackstone Group, CCMP Capital, The Carlyle Group and Pacific Equity Partners.
Australian newspapers reported media companies Fairfax and Seven Network have dropped out of the race.
The sale is expected to raise expected to fetch nearly $2 billion
- NZ HERALD STAFF
