Voyager helps Xtra sail through PC doldrums

By PETER GRIFFIN

Strong growth in Telecom's internet business and better margins on wireless services were revealed in the company's latest profit figures, released yesterday.

Telecom's internet and directories business, which employs about 1000 people, was the "star" performer of the company's four divisions this time around, according to chief executive Theresa Gattung.

Xtra's revenue of $49 million in the half-year to December 31 was up 36 per cent on the same period in 2000, with the country's biggest internet service provider (ISP) increasing its active user base by 34 per cent to 335,000.

Those gains were made despite criticism of Xtra for bumping up the price of its flat rate internet offering and removing a popular pay-as-you-go scheme.

Xtra's consumer general manager, Rod Snodgrass, said the continuing recession in the PC market towards the end of last year failed to dent Xtra's growth which was helped when the ISP bought an undisclosed number of customers from defunct rival Voyager.

"Growth in dial-up account numbers has been strong and there's been uncertainty about [TelstraClear's] Zfree, that the free service will be turned off," he said.

Xtra customers responding to the company's drive to cull inactive accounts had also reactivated their access plans, improving the numbers.

"Reconnects have been as high as account cancels. That provided growth from within the customer base."

Across the Tasman, Telecom's internet operation Connect.com had more modest growth of nearly 12 per cent. Xtra had about 20,000 customers using the Jetstream or Jetstart high-speed internet services, which Theresa Gattung said experienced a combined take-up rate of 1500 per month.

Those services contributed to earnings of $14 million in the half year to December 31, up 250 per cent on the same period in 2000.

Telecom's much-scrutinised 2.5G mobile business now had 110,000 customers which were starting to deliver the added value Telecom had long talked about with "post-paid" mobile ARPU (average revenue per user) increasing from $71.20 per month in the September quarter to $73.70 last quarter - an increase put down to CDMA customers' doing more with their phones.

Theresa Gattung said the launch of Telecom's next generation CDMA1x network, once tipped to be in operation by the end of last year, had been pushed out to the second half of this year.

Earnings from Telecom's wireless business overall fell 4.8 per cent in the half-year period to $60 million.

But revenue increases and cost savings from a wholesaling deal Telecom sealed with Vodafone Australia late last year improved overall forecast earnings for the year by over 1 per cent, said Mr Mercer.

Locally, Theresa Gattung repeated that TelstraClear would be a "formidable" competitor and said an interconnection agreement from the TelstraSaturn days would be coming up for renegotiation in the next two months.