Telstra CEO Trujillo stands by TelstraClear

NZ and trans-Tasman business important to Telstra

Telstra’s CEO, Sol Trujillo, has reiterated the importance of the company’s New Zealand and trans-Tasman business after the Australian incumbent reported its annual results last week.

TelstraClear’s revenue, including intercompany charges, declined from $693 million in 2007 to $684 million for the year ended 30 June 2008. According to the company’s report, the decline was primarily because of the termination of its mobile agency agreement with Vodafone.

That agreement ended in acrimony on 30 June, 2007.

However, earnings before interest and tax rose from a loss of $28 million in 2007 to a small profit of $7.5 million.

Persistent market rumours that TelstraClear is for sale were not borne out by Trujillo’s answers to questions from analysts and press after the results announcement.

Trujillo said TelstraClear’s underlying performance was good, especially in the consumer market, though softer in business. He said he expects ongoing improvements in the New Zealand business and expressed a desire for it to become more competitive.

Trujillo reiterated that trans-Tasman business was important to Telstra. In reference to Telecom’s soft result, announced the previous week, he said that market conditions in New Zealand were tight and competitive.

No comment was available from TelstraClear locally about the performance, but Telstra’s report highlighted a 20% increase in consumer business through the hybrid fibre coaxial cable network in Wellington and Christchurch.

The report says broadband penetration has increased by 13 percentage points during the year and is at “world leading levels” with 64% of the HFC customer base now broadband enabled.

That was offset by a decline in calling revenues “as a result of competitor led price erosion”, according to the report.

Total expenses, excluding depreciation, decreased by 7.7% because of reduced labour costs, network payments and other operating costs.

“This was delivered by operational efficiencies such as platform retirements and the renegotiation of contracts. The utilisation of shared services within the wider Telstra group also reduced costs within New Zealand.”

IDC telecommunications analyst Rosalie Nelson says the result is not a resounding success, but it is a turnaround in tight market conditions.

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