TelstraClear rebuts Aussie analyst's 'garage sale' claims

TelstraClear is discounting a prediction by controversial Australian telecommunications analyst Paul Budde that it will pare down its operation and turn away from the consumer market.

"These are uninformed comments and are not based on any facts," says communications manager Chris Mirams.

In a bulletin last week headed "What next for New Zealand", Budde says "it just doesn't make sense for Telstra to hang on to its marginal operation in New Zealand. There is little or no desire by the mother company to invest further in New Zealand, beyond what it sees as its core business there -- Trans Tasman business and corporates -- and for this you don't need the current organization.

"So Telstra will slowly let the company shrink to this core unit and accept significant write-offs in the process. Or it might put the New Zealand business up for a garage sale."

In response, Mirams points to the company's achievement of its best ever profit, in the second half of last year.

"We have not stopped competing aggressively in the consumer sector," he says, claiming that in the past year this side of TelstraClear's business has grown by 12% and broadband usage is up by 55%.

"We are also doing good business in the SME market."

Mirams also hints at significant moves to come in the business market based on unbundled Telecom lines and a new initiative in mobile, but declines to give any details.

Budde, Mirams says, hasn't talked to any TelstraClear executives in more than a year, therefore it is hard to understand the basis of his conclusions.

TelstraClear has no intention to shrink its operation, he adds. "Our staff levels are quite stable and we have a full schedule of work that will need all those people."

TesltraClear intends to invest $100 million in the business this year and its revenue payback on investment, at 15%, is above average for the market, he says.

"After all those years it is sad to see that Telstra's involvement in New Zealand has, in the final analysis, achieved very little for national competition in the market," Budde says. "This is most regrettable and will not please the government, which genuinely wants to improve the competitive environment in the country."

Asked about the reliability of his data given the lack of contact with TelstraClear, Budde replies: "I have been analyzing the NZ market now for 15 years. If I believed everything these telco companies are prepared to talk about I would have been out of business a long time ago.

"There is, furthermore, no way that they would want to discuss this situation with me as that would be against company policy. At the same time by making my own analyses I have proven to be more right than wrong and as a proof of that I am still in business.

"This is my analysis of the situation in New Zealand based on my own observations and talking to a large range of people within the NZ market as well as looking at international developments relevant to NZ.

"So time will tell, I assume."

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