TelstraClear customers up ahead of sale to Vodafone

TelstraClear CEO says telco has increased its customer base by 7 percent

TelstraClear and Vodafone could between them boast more than 30 per cent of the home broadband market after what TelstraClear boss Allan Freeth described as a "fantastic year" for the company.

Telstra's annual results showed the revenues of its New Zealand subsidiary dropped 3.9 per cent to $644 million, but its earnings before interest, tax, depreciation and amortisation (EBITDA) were up 18 per cent at $127m.

TelstraClear chief executive Allan Freeth says it has signed up an additional 40,000 customers over the period, increasing the size of its customer base by 7 per cent.

The earnings figure excludes a $165m write-down on goodwill which was made as a result of Telstra's decision to sell the business to Vodafone. The Commerce Commission has said it could decide whether to approve the takeover as soon as next month.

A report from Roy Morgan Research says that if the merger is approved, Vodafone’s nine percent residential fixed line market share will increase to 25 percent, while its home internet market share will increase from 11 percent to 26 percent. The biggest regional gain will be in Wellington, where TelstraClear has a market share of 32 percent of the internet market.

The commission’s latest annual monitoring report shows that TelstraClear has 16 per cent of the home broadband market and Vodafone 13 per cent, while market leader Telecom has 49 per cent. But Freeth says TelstraClear's market share has probably increased to 17 to 18 per cent.

TelstraClear has been selling a DSL-based phone and 40 gigabyte broadband plan for $75 a month and Freeth says it has been making seven or eight times more sales than normal on some days.

"We had a particularly good response in provincial centres where the full effects of competition had not been felt."

The company has won the business of the Justice Ministry, ACC and the Salvation Army during the year, he says.

Vodafone chief executive Russell Stanners has said he would assume control of the merged business, if the takeover of TelstraClear was approved. Freeth says he is focused on getting the company to the point of the handover and would think about his own future at that point.

The company's 1300 staff had taken the takeover surprisingly well in their stride, he says. Freeth revealed he had canned the planned launch of an internet television service as a result of the discussions, but apart from that he says it remains "business as usual".

TelstraClear has signed up some consumers to ultrafast broadband plans in Whangarei and was "UFB-ready" but the company says it does not expect to launch a consumer UFB service nationwide before the merger was done and dusted.

At the moment UFB was not sufficiently widely available to justify a launch, he says.

"There are still a number of things that haven't been sorted out in terms of the cost of connecting from the street to the premise."

Parent Telstra reported a 1.1 per cent rise in its revenues to A$25.4 billion ($33.1 billion) with profits up 5.4 per cent at A$3.4 billion. Analyst Ovum said Telstra's strong cash flows meant its "infrastructure leadership, particularly in mobile" would not be threatened in the foreseeable future.

- additional reporting from Computerworld staff

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