TelstraClear, the local subsidiary of Australia's Telstra, made a loss as the Canterbury earthquakes and costs of setting up a call-centre in the Philippines eroded earnings.

The Auckland-based unit made a loss of $5 million in the 12 months ended June 30 on an earnings before interest and tax basis, compared to a profit of $16 million a year earlier. Revenue increased 1.2 per cent to $701 million, while operating expenses rose 6 per cent to $568 million.

Telstra said the increased costs came from the restoration and recovery activity incurred by the Canterbury quakes, and the one-off labour, travel and training costs from shifting about 120 call-centre jobs in Christchurch and Paraparaumu to Manila last year.

It had previously bucked the outsourcing trend in 2007 when it brought IT support back in-house.

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The New Zealand unit contributed a A$28 million EBIT loss to Telstra's group earnings of A$5.69 billion. Local sales of A$516 million made up 2.1 per cent of Telstra's A$24.98 billion group sales, which rose 0.7 per cent in the year.

Telstra's annual net profit fell 18 per cent to A$3.25 billion.

Telstra's shares, which are dual-listed, fell 2.3 per cent to $3.47 on the NZX.

Last month Telstra rejigged its group structure after agreeing to lease its fixed-line network to the Australian Federal government as part of the country's broadband infrastructure project.

Governments on both sides of the Tasman are looking to align their respective national broadband projects, with New Zealand undertaking a similar plan utilising dominant local player, Telecom.