KEY POINTS:
TelstraClear has turned from a loss to a profit but it still only contributed $7.5 million to its parent's A$6.23 ($7.9) billion annual operating profit.
The New Zealand business owned by Australia's Telstra Corp today reported earnings before interest and tax of $7.5m in the year to June 30 compared to a loss of $28m in the same period last year.
Much of the company's loss last year was due to the costs of shutting down its failed Unplugged wireless network trial in Tauranga.
The profit was achieved on revenue of $684m, down from $693m last year and $727m the year before.
In a brief commentary, Telstra said the main reason for the decline in revenue at TelstraClear in the last year was the ending of a mobile agency agreement on June 30, 2007.
Excluding the impact of this, the business remained strong.
The consumer services provided on the company's cable network in Wellington and Christchurch recorded revenue growth of 20 per cent.
But there was a decline in calling revenues because prices had been eroded by competition.
Expenses in New Zealand were lower as network, labour and other costs fell, and as services were shared from within the Telstra group.
TelstraClear said the exchange rate had an unfavourable impact on revenue and a favourable impact on expenses and they netted each other off to have a neutral impact on earnings.
Capital expenditure was reduced by 13.7 per cent to $113m after major projects were completed. The company now has a targeted approach to the buildout for connecting new customers.
Telstra Corp bettered its guidance for revenue growth while its underlying earnings were at the top end of its forecast.
Telstra's bottom line net profit for 2007/08 was A$3.71 billion, up from A$3.28 billion in the previous year.
Underlying profit, or earnings before interest and tax rose 7.7 per cent to A$6.23 billion.
Revenue increased by 4.7 per cent to A$24.828 billion, bettering guidance of 3 to 4 per cent growth.
"Telstra's turnaround continues to gain momentum on all fronts with our fiscal year guidance met or exceeded for the third consecutive year," chief executive Sol Trujillo said in a statement.
"We have redefined our business by investing to create competitive advantages and this value differentiation strategy, underpinned by our customer-centric transformation, sets us apart."
- NZPA
