Giant's focus on need for speed

High-value customers with a need for speed will be at the forefront of Telecom's push to regain ground in the cellphone market.

At the company's third-quarter results briefing in Sydney, chief executive Paul Reynolds said customers using cellphones to browse the internet or connect to the office would be key to driving up mobile revenue.

"For us it's about - in quite a mature market in New Zealand - going into the customer base, in corporates and high-value customers, and up-selling to those."

He said the network build, which includes 942 base stations and fibre backhaul to 13 cities, would target a 50 per cent share of revenue.

At present Telecom has a 40 per cent slice of revenue and a 47 per cent share of the customers.

Reynolds said growth in the mobile market continued to slow as the company moved toward the launch of the new XT Network.

Pre-paid customer connections were down by 16,000 for the quarter. "We think a lot of them are very low value or unprofitable unused [emergency] phones and low-tech offerings."

The agreement with Vodafone to install interference-reducing filters on its transmitters had not seen the network launch schedule change, he said.

The launch would still be next Wednesday and Telecom would begin pre-selling connections. Customers would go live on the network at the end of this month. "I've said I'll launch when those sites are done and those sites are going to be done."

Reynolds was upbeat about growth of its mobile business, saying its IT services wing Gen-i had signed 5000 new connections to the XT Network.

He said details including what customers would pay for calling would be revealed in the next couple of weeks.

He said the "good" quarter reflected one offs including a $40 million dividend from its shareholding in the Southern Cross cable.

Chief financial officer Russ Houlden said the company had remained relatively resilient in the face of an economic slowdown.

The March quarter saw net profit rise 14 per cent to $159 million and ebitda up 2 per cent to $478 million.

Net profit for the nine months was down 40 per cent on the previous year to $322 million, with ebitda down 10 per cent to $1.26 billion. The adjusted ebitda figure, excluding $101 million of writedowns over the previous nine months, was 3 per cent down on the previous year to $1.36 billion.

The company reiterated guidance of a full-year ebitda decline of between 5 per cent and 8 per cent, with a net profit of $460 million to $500 million.

Telecom shares closed at $2.72, down 10c.