Numbers improve as TelstraClear cuts

By ADAM GIFFORD

Cutting $100 million from TelstraClear's operating costs has helped the company make $126 million in the year to June 30, before interest, tax, depreciation and amortisation charges.

That compares with a $7 million loss last year, normalised to take into account the purchase of Clear Communications during that year.

It expects to become ebit positive in the 2005 financial year, helped by a decision of Australian parent Telstra to turn more than $1.2 million debt into equity, a move that will slash interest payments. In the six months to June 30 last year, TelstraClear paid $45 million in interest.

"The synergy benefits are coming through. We have a more sustainable and robust business than 12 months ago," said chief executive Rosemary Howard.

"We also kept top line revenue growing in double digits, which is very good for this industry."

Headcount has stayed about the same, at 1200 staff.

Gross margin increased from 40 per cent to 49 per cent, which Howard said reflected greater volumes of business in small areas like digital subscriber loop services.

She said regulatory changes were starting to have an effect, with the interconnect price now set by the Telecommunications Commissioner rather than by rival Telecom, but there was still much to be done.

"New Zealand has the fourth-highest business mobile prices in the OECD. That is understandable when there are only two mobile providers."

TelstraClear sells Vodafone services, but is planning its own 3G mobile network.

Howard said it would continue pushing for the unbundling of the local loop.

"The frustration is in New New Zealand we have not yet got access through the regulator to use Telecom's copper. In Australia, Telecom can buy copper lines from Telstra as well as wholesale our digital subscriber loop.

"New Zealand has one of the worst uptakes of broadband in the OECD, and that is because of a failure in the market which is caused by lack of choice."