Telecom: now for the good news

By PETER GRIFFIN

Telecom moved to soften the impact of its poor full-year earnings report yesterday by unveiling a new set of offers for residential customers and plans to spend $1 million clearing defunct cables in the capital.

And Telecom continued its drive to stimulate interest in its new $200 million CDMA network, creating a forum for mobile applications developers to cooperate with the company on software projects. Members of "D-zone" will get access to Telecom's technical solution centre and the guidance of a "partner manager".

Despite a dip in net earnings of 18 per cent for the year and in earnings per share from 44.4c to 36.4c, analysts greeted the Telecom full-year result positively, claiming the company's move to take full ownership of Australian telecoms company AAPT, its large investment in mobile technology and a "3G" tie-up with Australian mobile operator Hutchison, had given it a good base for further growth.

And while Telecom's local revenue growth was just 1.4 per cent, revenue from data services was up 13 per cent and revenue from the company's internet business rose by 18 per cent. Users of Telecom's internet service provider Xtra jumped by 36 per cent.

The company moved to strengthen its partnership with Sky through the bundled SKY-FI deals which Telecom claims have attracted 7000 customers.

TV Line, a new $69.95 a month package launched yesterday, will let customers combine Telecom monthly line rental with Sky Digital's basic offering.

Telecom chief executive Theresa Gattung said the company's arrangement with Sky to sell telephone and internet services as part of the SKY-FI series was non-exclusive. TelstraSaturn also had a distribution deal but had so far not brought any products to market with Sky.

TelstraSaturn is believed to be pursuing a partnership with Sky in the wake of its decision to ditch plans to launch its own satellite pay TV service.

A partnership with Sky in which TelstraSaturn would likely provide telecommunications services would put further pressure on Telecom.

Other new services included Talk Line, combining monthly line rental with a toll package, as well as Smart Line and Message Line, both of which offer line rental with enhanced services like Call Waiting or Call Minder.

Meanwhile, Telecom will commit $1 million to remove the clutter of abandoned technology in Wellington. The money will be spent on removing 170 kilometres of overhead cabling installed in 1996 as part of a hybrid fire coaxial (HFC) network that was to provide broadband services to residential and small business customers.

The infrastructure was initially set up to drive Telecom's First Media cable TV venture, which was scrapped in 1998.

Despite pulling the plug on an Australian CDMA network, a move which contributed a $A125 million ($151 million) write-off to its results, the company is keen to pursue mobile business across the Tasman.

Ms Gattung said AAPT's mobile phone resale division, Cellular One, was in discussions to secure further resale agreements.

"We're considering a number of potential resale agreements for Cellular One with a variety of carriers that could potentially include a mobile virtual network operator," she said.

But Telecom will be searching for a slice of a shrinking pie. The Australian mobile market is ready to contract from next year, says Sydney-based telecoms analyst Paul Budde.

Mobile revenues had grown to around $6.03 billion this year, he said, but would shrink to $5.8 billion next year as big players Telstra, Cable and Wireless and Vodafone signed up fewer customers.

"The future of mobile is not going to be attracting new subscribers because most of them are already connected. It's the same situation in Australia," said UBS Warburg analyst Paul Richardson.