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Vector's new boss gave investors a disappointing Valentine's Day gift on Thursday, announcing a big drop in profits on his first official day in the job.
Simon Mackenzie was appointed group chief executive on Wednesday, having been acting chief executive since the middle of last year. On Thursday, the electricity and gas lines company reported an 18 per cent fall in its December half-year net profit, to $90.7 million.
Chairman Michael Stiassny said the result was in line with Vector's expectations.
The company blamed the drop on higher borrowing costs, up $7.1m, and increased depreciation on metering assets caused by a pending upgrade. Its dividend payout held steady at 6.5 cents per share.
Investors will now wait to see whether Vector can realise the $700m to $1 billion it is thought to want for the sale of its Wellington electricity network. Analysts suggest that price range is unrealistic, raising fears Vector may have overvalued the asset.
Forsyth Barr analyst Andrew Harvey-Green said, $550-600m was a more realistic price for the Wellington network. Whether Vector would sell at such a price remains to be seen, but Harvey-Green said the company might hang on to the asset if his price estimate was correct. The fact Vector still seemed to be interested in selling, despite hinting offers had not been as high as it hoped, suggested the company was a more willing seller than it had suggested.
Vector's news wasn't all bad last week - the Auckland-based company also gave hope to frustrated broadband users by announcing plans to extend its fibre-optic network.
In a move that should help usher in faster and more reliable broadband access, Vector said its current, 500km-long fibre-optic network would be extended by more than 300km.
Vodafone would be the first commercial customer to access the extension, which would cover most of Greater Auckland.
Mackenzie said the agreement with Vodafone would remove existing bandwidth constraints, and increase the reliability and speed of broadband services.
Vodafone customers would be able to access the network via 41 Telecom telephone exchanges, giving access to Telecom's unbundled copper local loop.
It's been a turbulent time for Vector's upper management, the company announcing several changes and some job losses.
Mackenzie was the company's chief operating officer before replacing Mark Franklin as acting CEO last July. He has been with Vector since 1998.
