AAPT to stay - for now

Despite the huge losses AAPT continues to rack up, Telecom boss Theresa Gattung says the company will keep its troublesome Australian unit for the foreseeable future.

Writedowns on Australian operations, largely AAPT for which Telecom paid more than $2 billion six years ago, have reduced its value to A$270 million ($343 million). The latest writedown was $394 million after tax.

Telecom has been looking at selling all or part of AAPT in the past year but has not received any acceptable offers.

Gattung indicated yesterday that what ultimately blocked a sale was the need for an Australian operation to support the New Zealand business.

"As Kiwis, whether we like it or not, we're getting more and more linked in with Australia. Being able to offer a transtasman service and having infrastructure on the ground in Australia is really important to many if not most of our business customers."

AAPT had grown by acquisition and its mass market operation had not offered a good customer experience.

Telecom has been investing heavily in new billing and customer service. The company said that investment would continue with capital expenditure in Australia rising A$13 million to A$120 million this year.

Although revenue from Australian operations had remained fairly stable, Telecom said earnings had fallen sharply, mainly due to an "aggressive" increase in wholesale charges by Telstra.

Gattung was not optimistic in the short term but believed that Telstra might eventually be forced to offer a better deal.