KEY POINTS:
Strong growth in the consumer market helped TelstraClear bounce back from a loss to announce what the company says is its best result so far.
The telco announced a $1.1 million profit before interest and tax for the December half year, up from a $6.5 million loss a
year ago.
TelstraClear's Wellington and Christchurch cable networks were the big earners, growing 24 per cent on the previous year as customers warmed to its bundled product offerings.
Chief financial officer Michael Boggs said the consumer market was also strong in Auckland and the rest of the country. "We're seeing double-digit growth across the board."
Lower operating costs helped to boost the profit, with the company shaving costs by 10 per cent during the half year.
It wasn't all good news for the Aussie-owned telco.
TelstraClear's revenue fell 1.5 per cent from $349.5 million to $344.3 million, which Boggs said was because it stopped selling Vodafone mobile services in favour of a new TelstraClear branded service.
He said mobile revenue would bounce back with the expansion of TelstraClear mobile products in coming months.
Calling revenue was also down for the company, a result of lower usage and higher competition. Boggs said there was tight competition right across the telco market, and certainly "plenty" in the area of calling revenue. "Some of our competitors are offering bundles where they end up giving some things away for free. We're only interested in developing profitable business, and unfortunately that means we sometimes lose customers."
Rival Telecom saw its stocks dip this month after profits fell 12.6 per cent for the December half year to $397 million.
The NZX-listed telco giant announced increased operating revenues for data revenue, broadband and internet and IT services in its half-year result. But Telecom's revenues for interconnection, mobile and calling dropped, and local service revenue was flat.
TelstraClear's Australian parent, Telstra, said yesterday that net half-year profits for the company as a whole rose 13 per cent to A$1.93 billion ($2.23 billion).
Telstra outperformed analysts' predictions as sales of high-speed wireless and internet services more than made up for lower revenue from the fixed-line business. The announcement saw Telstra shares hit a three-month high in Sydney trading, rising 13 Australian cents to A$4.82 yesterday morning Sydney time.
Chief executive Sol Trujillo predicted earnings before interest and tax would rise as much as 8 per cent for the full year.
Earnings before interest, taxes, depreciation and amortisation (ebitda) were expected to increase as much as 5 per cent, up on the company's November prediction that ebitda would climb 4 per cent for the full year.
Telstra is halfway through a five-year plan to boost earnings through staff cuts and investments of more than A$10 billion to upgrade its network. It plans to cut almost a quarter of its workforce by 2010.
- BLOOMBERG
