KEY POINTS:
Telstra boss Sol Trujillo has delivered a blunt assessment of the recent mediocre performance of the Australian telco's New Zealand subsidiary, TelstraClear.
TelstraClear's turnover for the half-year to December 31 fell 4 per cent to $335 million, an indication that like all telcos, the company is smarting from the slump in call revenue.
The numbers are minuscule in the context of Telstra's overall result for the half: an interim profit of A$1.7 billion ($1.9 billion) on turnover of A$11.6 billion.
Trujillo has had his hands full dealing with a raft of business and political ructions related to the Australian business since becoming CEO in July 2005. The fact he has visited this country only once (and briefly) since then is evidence he doesn't spend much time worrying about the New Zealand operation.
But when asked about TelstraClear at a post-result analysts' briefing last week, he didn't mince words.
"Obviously I am not pleased with the deterioration in performance, full stop, no qualification to that," Trujillo said. "So we are working on how we are going to improve that."
He said the unbundling of Telecom's local loop presented opportunities for TelstraClear, but wasn't giving away much beyond that.
"We are looking to improve, we will wait to see what the turnout is and we will deal with options at that point in time in terms of how we go forward."
Many in the telecommunications industry don't expect to see any benefits from local loop unbundling until next year at the earliest. At present the regulators, Telecom and its competitors are working through the arduous motions required to put in place the pricing structures and other processes required.
Trujillo's vagueness about TelstraClear's strategy epitomises the frustrations Telecom's competitors are enduring as they wait to see what the rules will be for playing on the newly levelled playing field.
Meanwhile, TelstraClear has its own set of issues to work through. Trujillo needs to throw some serious cash at New Zealand if the subsidiary is to maximise its opportunities under the new regulatory regime.
It is a sad indictment on the state of the sector that TelstraClear, our third largest telco company, has gaping holes in its infrastructure. Most notably, while it runs fibre networks across parts of Wellington and Christchurch, it doesn't have a similar network in Auckland.
Telstra's chief financial officer, John Stanhope, noted at last week's briefing that while TelstraClear's revenue had fallen during the past half year, the company "continues to grow revenue where we have infrastructure". What a shame that doesn't include our largest city.
Telstra's half-year result pointed out that TelstraClear's capital expenditure increased by 17.5 per cent to $74 million because of "core network expansion and preparing to take advantage of local loop unbundling".
But $74 million is peanuts in terms of building up a competitive arsenal as the industry undergoes its biggest regulatory upheaval in two decades.
TelstraClear is building a $50 million pilot 3G mobile phone network in Tauranga. While this is a commendable first step towards possibly introducing a vital third player into the staid, over-priced mobile market, it is still very much toe-in-the-water stuff.
Who knows if, or when, Trujillo will be convinced to write the eight-figure cheque needed to turn the Tauranga pilot into a nationwide assault on Telecom and Vodafone's cosy mobile duopoly.
TelstraClear chief executive Dr Allan Freeth hit the headlines just before Christmas following the external circulation of a caustic staff motivational email which warned his employees that the company was on "a trajectory to disaster".
Freeth colourfully declared that while a challenger telco in TelstraClear's shoes should be exhibiting the killer instinct of a character from a Quentin Tarantino movie, "we are like a Walt Disney Bambi character".
Rumours that TelstraClear is about to be rebranded as Telstra have been doing the rounds this month. The company has declined to comment.
There is also speculation the company is on the verge of introducing its popular Australian BigPond internet portal into New Zealand.
Both options would appear to be sound businesses moves, but neither will have the company's competitors running scared.
For the sake of the industry - and consumers crying out for more robust competition - let's hope that TelstraClear can become more Uma Thurman than Bambi.
And let's hope Sol gives Uma a decent capex budget to brandish as a weapon.
