Increased costs temper TeamTalk's profit

Telco wins five-year Powerco comms contract

NZX listed telecoms service provider TeamTalk has reported a 11 percent decline in NPAT for the half year to 31 December 2018 on flat revenues, blaming the decline on increased costs.

Half-year profit after tax was $1.915m down $2.147m for the same period last year. Revenue was $17.28m, down from $17.43m. Net company debt at 31 December 2018 was $11.4m, the lowest in over a decade, following a placement and rights offer that raised $8.2m late last year, the company said.

In October 2018 TeamTalk issued guidance forecasting net surplus after tax for the year to 30 June 2019 to be broadly in line with the FY18 result of $4.4m.

TeamTalk said it had made capital expenditure of $3.6m during the half year, most of which had gone into its new digital radio network. Inventory also increased through a combination of stock held for capital project rollouts and digital radio terminals required to migrate customers to the new digital network.

"The rollout of the digital radio network was 50 percent complete as at 31 December 2018, with the first phase of the rollout on track for completion by 30 June 2019.," TeamTalk said.

In December 2017 TeamTalk selected Christchurch-based Tait Communications to supply and build the network, saying it would be integrated with TeamTalk’s other networks and services.

TeamTalk chairman Roger Sowry said the company would return to paying a dividend at the end of the current financial year. "We intend to maintain a dividend distribution of 50-70 percent of net profit after tax following the completion of our major capital projects," he said.

TeamTalk wins five-year Powerco comms contract

Earlier this week TeamTalk announced it had been selected as the preferred provider to manage Powerco’s private telecommunications network comprising a digital mobile radio voice network and a wide area packet data network.

Read more: TeamTalk network rollouts and profit on track

It said these networks would eventually carry all of Powerco’s network operations voice, video, data and SCADA traffic.

TeamTalk said the deal was for five years with potential for extension, and the culmination of "an intensive eighteen-month bidding process against a number of other major IT and communications providers."

Powerco is New Zealand’s second largest electricity utility and gas distribution utility with around 1.1m customers. It has electricity networks in Western Bay of Plenty, Thames, Coromandel, Eastern and Southern Waikato, Taranaki, Whanganui, Rangitikei, Manawatu and the Wairarapa and gas pipelines in Taranaki, Hutt Valley, Porirua, Wellington, Horowhenua, Manawatu and Hawke’s Bay.

 

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