TelstraClear future uncertain despite reasonable result

Sales up: revenue drop a result of loss of large contracts, Freeth says

TelstraClear turned in a respectable annual result, earning $16 million before interest and tax, but said the industry faced an "uncertain and unstable" future. The result was down $2m on last year and revenues fell 1.4 per cent to $693m. Chief executive Allan Freeth said consumer sales were up 8 per cent and the revenue drop reflected the winding-up of some large government and corporate contracts that the company lost a few years ago. TelstraClear had since won more business from enterprise customers and that would start to be reflected in its accounts from the end of this year. Dr Freeth said the earnings were pleasing given the company had spent tens of millions of dollars unbundling Telecom exchanges and upgrading its cable networks in Wellington and Christchurch. Staff numbers had held steady at about 1400 as it transferred some administrative functions to Australian parent Telstra but bolstered its sales teams. In the "next month or so", TelstraClear would begin offering 100Mbit/s download speeds to its 80,000 cable customers in Wellington and Christchurch, where it claimed more than half of the broadband market. It was also almost ready to begin customer trials of T-Box, a MySky-like personal video recorder (PVR) for its cable customers, after a series of long delays and had "finally got most of the bugs out of it". T-Box will let customers on its cable network pause and rewind television and record programmes straight to a built-in hard drive. A spokeswoman said TelstraClear was not considering offering compensation for a series of missed deadlines releasing the device. "We do acknowledge that customers have a choice around opting to wait for our PVR and are thankful for the loyalty they continue to display with regard to this issue. T-Box is a great product and it's important that any minor bugs in its manufacture are fixed before its broader take-up in the market." Dr Freeth said the industry faced considerable uncertainty as the Government finalised its $1.35 billion ultrafast broadband plan to connect three-quarters of the country with fibre-optic cable. But there was no economic case for anyone to overbuild TelstraClear's Wellington and Christchurch networks with fibre. "You would be an incredibly brave person." TelstraClear would consider becoming involved in the Government initiative only "if people talked realistically about value and customer-worth". Parent Telstra reported a 4.7 per cent drop in net profit to A$3.9b, with sales falling 2.2 per cent to A$24.8b. The result was broadly in line with expectations. Macquarie Equities Research said Telstra had been affected by customers abandoning fixed-line phones and a dropoff in advertising in the printed Yellow Pages.

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