Gattung - Telecom's broadband future

Telecom CEO Theresa Gattung addresses shareholders at their AGM in the Christchurch Town Hall as board chairman Roderick Deane, right, listens. Picture / Simon Baker

Telecom's heavy investment in broadband will see new services more than offset declining revenues in its bread-and-butter, fixed-line calling business, but it will be several years before the investment pays off, chief executive Theresa Gattung says.

"The voice business is in decline whatever we were to do, so unless we have committed steps for future areas of growth, we are not going to be able to reverse the decline in the traditional business," Gattung told shareholders at the company's annual meeting in Christchurch yesterday.

Telecom is in the middle of a reinvestment programme involving $750 million in capital expenditure in the 2006 financial year and the $1.4 billion it plans to spend rolling out a Voice over internet Protocol network over the next few years.

Gattung and chairman Roderick Deane's answers to a handful of questions - including a query about a sharp rise in the number of Telecom employees receiving salaries of $100,000 or more - appeared to satisfy shareholders at the uneventful meeting.

Deane said Telecom's specialised workforce requirements and its purchase of two IT companies were the reason for an apparent leap in the number of staff on high salaries.

Out of the company's total workforce of 8560 across New Zealand and Australia, the number of employees on salaries of $100,000-plus rose from 1329 to 1697, the annual report shows.

"We operate in an industry which is capital intensive and has a high level of technology," said Deane. "We need a lot of staff who have considerable expertise." Telecom's underlying net profit increased by just 4 per cent for the past financial year and its revenue was up only 4.6 per cent.

While the mobile business posted a "fantastic" 2005 result, Gattung said she expected it would be several years before its investment in digital subscriber line (DSL) broadband services paid off.

Gattung said Telecom hoped the broadband offering would turn out to be as much a winner as its mobile business.