AAPT CEO hails turnaround at investor briefing

Paul Broad says Telecom subsidiary has reached a tipping point

AAPT chief executive Paul Broad has moved to position the New Zealand Telecom-owned business unit as the little telco that could, claiming a big turn-around in the company’s fortunes in the last year.

Speaking at Telecom’s Management Briefing Day in Sydney last week, Broad said the company had hit a tipping point, churning low margin customers, but winning big-ticket clients such as Rio Tinto, Austar and America Express.

“We were minus NZD120 million (A$96.51 million) the previous year and this year I'm pleased to say we sent NZD40 million-odd across the ditch and with the exchange rate being nice and favourable then that makes it a profitable business for Telecom and we're pretty proud of that,” Broad said.

“This change has been massive. We've gone from EBITDAs in the mid thirties to… NZ$D92 million-odd this year and NZD100 million-odd next year.”

Working the tipping point analogy further, Broad referenced Malcolm Gladwell’s book of the same name to claim that the company was entering a renaissance, like that which Hush Puppies shoes once experienced.

“Anyone read Tipping Point? “Broad said. “Yeah, Hush Puppy shoes, remember the Hush Puppy shoes and think about AAPT because they're like a pair of Hush Puppy shoes, they've gone through a lot of changes over time and a lot of people thought we're going to fall over but we haven't.”

Broad also flagged a range cost reductions at the telco including moving off its old mainframe computers, reduction in its billing engines down from 14 to four, and narrowing its 4000 products down to 10.

“We actually now have direct feed to our mobile sales. We resell Vodafone and we've always been able to get strong margins in mobile but never been able to convert that to a dollar because in back-office costs of bringing on a mobile customer became too hard,” Broad said.

“For new engine we direct fees from bill to Vodafone and hold a significant margin in mobile, fantastic. So we've upgraded in our billing platforms, we're upgraded in our core network and those are now starting to deliver up the results we want.”

Broad also referenced the axing of 31 local AAPT call centre staff and the expansion of its Manila call centre. Currently the telco has 286 staff based in Manila and anticipated adding 100 staff in the next three months.

“The massive cost savings from that and a massive improvement in performance has been something we're very, very proud of,” he said.

AAPT earlier this month reported a $130 million decline in revenues to $668 million for the nine months to 31 March with almost across the board drops.

Local service, calling, interconnection, mobile, broadband and Internet, resale, and internal revenues all declined. Only data — up 3.1 per cent to $100 million, and other operating revenue — static at $14 million — did not decline during the period.

Of the declines, mobile revenue was the most dramatic dropping 28 per cent to $18 million, followed by calling revenue which dropped 24.3 per cent to $165 million, and Resale, which declined 19.4 per cent to $166 million.

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