Telecom says year of broadband well on track

UPDATED: Commerce Commission is quick to dispute telco's figures, however

Telecom says it is well on target to reach its self-imposed goal of 250,000 residential broadband customers by the end of the year.

Figures released in Telecom’s half yearly result today show the company has 122,805 residential broadband customers, a 65% increase over the previous quarter.

More importantly, Telecom points out that 14% of those customers are from its wholesale Unbundled Bitstream Service, or UBS, which only launched in September.

However, the Commerce Commission has also released its own estimates of Telecom’s broadband penetration rates, saying the wholesale side of the business only equates to 8.5% of the total residential number.

In a written statement sent out shortly after Telecom’s half yearly results briefing, the commission says it has not included those customers whose service is delivered via the JetStream Partnering Programme (JPP). Telecom is currently phasing out the JPP in favour of a separate resale service but has counted those customers still on the plan as part of its wholesale number. The commission says they are not.

“The Commission does not consider broadband connections under Telecom JetStream Partnering Programme to be wholesale connections for the purposes of its monitoring regime. Such connections have been treated by the Commission as Telecom retail sales. The Commission has also treated ten connections as retail which Telecom has listed as wholesale.”

The Commission does not dispute Telecom’s actual customer numbers, simply which category they should be counted in.

Chief executive Theresa Gattung says the previous quarter was the strongest in terms of broadband growth the company has ever seen.

“At one point in December we were adding one new broadband customer every two and a half minutes.”

That growth comes at some cost, however. Expenses for the broadband business segment were still far outstripping the revenue, despite such strong growth.

Chief operating officer Simon Moutter says that’s well within the company’s expectations.

“The payback for these things is expected to be around the 18 months to two year mark. We’re investing heavily ahead of revenue.” Moutter says it is important that the market have a company like Telecom that is willing to invest ahead of time.

“It’s important that we have a regulatory environment that encourages that kind of investment ahead of time because without it we wouldn’t have this kind of market at all.” The same trend was evident in the other high-growth segment — mobile. The launch of Telecom’s third generation cellphone network, T3G, cost the company around $40 million but is already producing results. Telecom gained 96,000 net connections in the quarter, the best quarterly result for some years.

“It’s been some time since mobile was a stand-out performer for us but it’s certainly back on form this time round,” says Gattung. Mobile data revenue grew by 136% in the second quarter and total revenue from voice and data services on both of Telecom’s mobile networks reached $600 million.

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