Smartphones, cloud are growth areas for Gen-i: Reynolds

Half-year results presentation sees kudos for Telecom's IT division

Smartphones now account for 37 percent of Gen-i’s mobile business, Telecom head of retail Alan Gourdie said at Telecom’s second half-year results presentation in Auckland today.

“That is a result of our Android strategy,” Gourdie said.

There is plenty of room for growth in that space, because New Zealand’s smartphone uptake is fairly low compared with many other countries, he said, noting that even in Australia, usage is higher.

Chief executive Paul Reynolds made a similar point earlier in the results presentation, noting that smartphones are “a big part” of Telecom’s mobile plans.

Reynolds also noted that smartphone use in New Zealand is low compared with other developed countries, adding “it is an exciting market, and there will be growth.”

Overall, Gen-i’s pre-tax profit for the July-December half year was $105 million, a 6.1 percent increase on the same period last year. IT services revenue was up 10 percent on last year.

“We have worked very hard on getting margins on IT services right,” Reynolds said, when highlighting Gen-i’s result.

“There is an unrelenting focus on IT services margins and we expect that to continue,” he said.

That includes rationalising the number of individual services offered.

“For example, we have identified 200 services that we will eliminate.”

That process is already underway, he said.

As well as the growth in mobile services driven by the now bedded-down XT network and the smartphone push, growth at Gen-i will come from cloud services, he said.

“Gen-i is very well positioned with a suite of cloud products.”

Coming changes in government purchasing policy have the potential to deliver benefits for Gen-i, he said, as it points to rationalisation and centralisation of suppliers.

“It’s an opportunity for us.”

Reynolds noted recent changes in the IT services supplier space, with consolidation such as Datacraft’s purchase of Integral-Axon, meaning there are now fewer, bigger providers.

“The dynamics are changing.”

Gen-i’s cloud and mobile offerings mean that there is also potential to sell more services to existing clients, as well as seeking new ones.

Servicing clients that operate in both New Zealand and Australia is another growth area, Reynolds noted, but for the half-year, Gen-i’s Australia revenues were down on last year.

This was partly due to the discontinuation of the CBA Bank contract in 2008; after Gen-i Australia decided not to renew the contract, it continued to derive some revenue during the switch to the new provider, but the account is totally gone now.

Much was made at the presentation of reductions in headcount, which counterbalanced an overall 3.3 percent revenue decline for Telecom’s group result.

However, in IT, Telecom will actually be hiring this year, Reynolds said, as it takes in-house approximately 200 roles that were previously performed by Telecom’s outsourcer HP.

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Tags gen-ialan gourdietelecomPaul Reynolds

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