KEY POINTS:
Telecom's new head says the company needs to scrap the traditional telco model and put the customer first in a bid to boost the company's flagging revenue growth.
After four weeks in the job, chief executive Paul Reynolds used yesterday's quarterly results briefing to outline his vision for Telecom.
"Telecom needs dramatically to make the shift from being a phone company, a utility if you like, to meeting customer needs through service, and through services largely defined in software," said Reynolds.
Reynolds spoke of the challenge of delivering telecommunications services in a world where increased growth opportunities were tempered by increasing technical complexity.
He said customers expected faster, cheaper and better services and the immediate delivery of innovations available in other markets.
Broadband would be the foundation of the company, said Reynolds.
He assured investors last week's announcement of plans to spend $1.4 billion on a high speed broadband network would not "blow our capital envelope".
The company has made a commitment to deliver broadband speeds of up to 20mbps to towns with 500 or more lines over the next four years by building a "next generation" high speed network.
Reynolds said Telecom would change its investment priorities to focus on next generation capability.
He said Telecom would work towards a single lower cost technology platform for multiple services rather than the existing situation of multiple platforms for single services.
"We're prepared for a world of operational separation and in that world we will be re-prioritising investment and making sure that as we do the foundations for IP [internet protocol] we do more of the good stuff and less of the legacy stuff - a decisive shift in our investments towards NGN [next generation network]," said Reynolds.
More detail on the planned fibre and ADSL2+ roll out would be available over the coming weeks.
Results for the first quarter were flat on the same period last year at $225 million.
Calling revenues were down, primarily in the toll calling market, because of more customers using their mobiles for calling and competitive pressure.
About 23,000 residential customers moved their home phone lines from Telecom to one of its retail competitors during the quarter. Mobile voice and data revenue grew just over 1 per cent, at the lowest end of the company's expectations, despite adding 48,000 new mobile connections.
"The outlook is for continued pressure on the overall revenue in mobile with a lot of market activity centring around fixed, mobile and bundled offers," said chief operating officer Simon Moutter.
At his final results briefing for Telecom, chief financial officer Marko Bogoievski said a decline in ebitda for New Zealand operations - down 8.2 per cent to $457 million - was consistent with previous guidance.
In a research note issued immediately after the result, Deutsche Bank analyst Sameer Chopra noted the $225 million net profit after tax was driven by a number of one-offs including lower interest charges following the banking of the Yellow Pages sale proceeds and favourable tax credits.
Telecom shares closed down 11 cents at $4.17.
Gattung, Reynolds never met
After 12 years with Telecom, Theresa Gattung's institutional knowledge left with her when she closed the door on her Wellington office for the final time at the end of June.
Her replacement, Paul Reynolds, told the Business Herald no handover took place with Gattung, in part because of the three month gap between her leaving and his arrival. "In fact, we've not met," he said.
Statements made since his arrival indicate Reynolds has created fresh plans for the company, including the announcement last week of investment in a high-speed broadband network.
The $1.4 billion investment is based on "a different footprint over different years", he said.
"For me it was like a real stake in the ground," said Reynolds. "Forget what we've said before, it's not my past. This is what we're going to do going forward."
