TelstraClear, the New Zealand arm of Australia's largest telco, cut $100 million in costs in the year ended June although it is still making a loss.
TelstraClear said today it turned the previous June year's $7 million earnings loss before interest, depreciation and amortisation (ebitda) into a $126 million positive.
At thesame time, revenues grew 11 per cent to $651 million, from $583 million, and the company cut out $100 million in costs from its business.
Chief executive Rosemary Howard said the lower costs reflected the successful integration of its predecessors, Clear and TelstraSaturn.
The company's gross margin increased to 49 per cent from 40 per cent.
TelstraClear, which did not release more financial details, will lodge its full accounts with the Companies Office later this year.
Parent Telstra Corp reported a 6.3 per cent fall in annual net profit today to A$3.43 billion ($3.89 billion), dragged down by writedowns on its Asian cable joint venture.
Ms Howard said TelstraClear did not pay tax yet because it had not made a profit, and it planned to break even in 2005.
"The business has been focused very much on the revenue line and the ebitda line, because it's been in a growth phase."
The turnaround in earnings proved TelstraSaturn and Clear had been too small to be viable in the long term.
The results also showed that New Zealand's regulatory and operating environment was becoming more conducive to competition, she said.
The company was planning to roll out its high speed 3G mobile network by the end of next year and was currently seeking expressions of interest.
Currently TelstraClear does not have its own mobile network in New Zealand but offers customers a mobile service through Vodafone.
TelstraClear welcomed Vodafone's plan to roll out 3G as well, because it would stimulate market growth, but Ms Howard said she realised there was not room for two 3G networks.
TelstraClear's revenue contribution to Telstra was small, but it was important because the New Zealand market offered a chance for Telstra to grow.
In November 2001 Telstra bought Clear Communications from British Telecommunications plc (BT) for about $143 million, which it merged with its 50-per cent owned unit Telstra Saturn.
