TeamTalk plunges into the red after ‘difficult year’

Reports after tax loss of $1.3m for the year to 30 June

NZX listed telco, TeamTalk (NZX: TTK) has reported an after tax loss of $1.3m for the year to 30 June, after turning in a $1.3m profit the previous year. Revenue was down 0.6 percent to $57.3m and EBITDA down four percent to $12.6m.

The directors’ report said FY16 had been “a difficult year,” adding: “the results do need to be viewed against a backdrop of considerable group-wide transition, significant investment in infrastructure and a challenging environment.”

It added: “Trading conditions continue to be tight, and as forecast, margins are under pressure as customers continually pursue more services at a lower cost. Unfortunately not all of our cost inputs necessarily follow the same path so we are constantly having to review the way we do things, as we continually strive to do as much as we can with our shareholders’ money.”

On a positive note, CityLink – a niche business broadband service provider - continued to make gains with an EBITDA result of over $7.2 million, almost 11 percent up on FY15. “The amount of data moving across CityLink’s Wi-Fi services continues to grow at pace and in recent months CityLink has completed a contract to upgrade a key link at the Wellington City Library with smart new technology that provides faster download speeds,” TeamTalk said.

“In contrast to 2015, when customer numbers were essentially flat for the whole year 2016 saw consistent month on month growth in customer numbers with total growth of about three percent.”

TeamTalk announced in July the appointment of a new CEO, Andrew Miller, a former CEO and managing director of Alcatel-Lucent NZ & Pacific Islands, but he is not due to take up the role until early September.

He replaces David Ware who founded the company in 1994 and who resigned in April citing stress. His comments at the time suggest that company would have been lacking effective leadership for some time.

Early in August TeamTalk engaged investment banking advisors, Cameron Partners, to work with both its board and Miller, to assist with a review of its strategy and the evaluation of options.

Announcing the company’s results, chairman Roger Sowry said: “An important element of the strategic review is consideration of the group’s cashflows, capex requirements and dividend policy. We have already highlighted the short term cash requirements that Farmside’s satellite customer migration programme has on the group.

“Another impending requirement is within CityLink where it will need to migrate parts of its Wellington fibre network off the city’s trolley bus infrastructure as that iconic part of Wellington’s transport network is replaced over the next few years. There are a number options that are being worked through but in all scenarios it is a major, multi-million dollar undertaking.”

He added: “Westpac, our long-term bankers, have remained supportive through this period and we have just entered into an amended facility that will take us into FY18.”

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