Subscriber growth hits Telecom profits

4 Nov 2005

Telecom New Zealand has said its continued push to sign up new broadband internet and cellular customers has impacted on its latest quarterly results. Net profit at New Zealand’s largest telco dropped 2% year-on-year to NZD199 million (USD137 million) in the three months to the end of September. Sales were up 2.3%, however, to NZD1.43 billion. The firm’s CEO, Theresa Gattung, has warned shareholders to expect more falls in profits as it pushes to roll out broadband wireline and cellular networks.

Although sales at Telecom’s largest unit, domestic fixed line services, stalled over the quarter due to increasing competition, broadband and mobile services both performed well. The company has now met its end-2005 goal of having 250,000 high speed internet customers, reporting 244,000 connections at the end of September and meeting the target during October; it also has a further 56,000 DSL connections which are leased wholesale to third-party operators. Sales at the internet unit were up 54% to NZD63 million. In the cellular market, meanwhile, Telecom saw revenues increase 13% to NZD188 million. The firm, which claims around 45% of New Zealand’s total mobile market, had 1.673 million cellular customers at the end of the period and is currently rolling out a 3G network nationwide.

New Zealand, Spark New Zealand Group