Vodafone NZ profits amid global woes

By PETER GRIFFIN

Vodafone Group this week reported the biggest annual loss in European corporate history, but the disaster will not be repeated at its New Zealand outpost.

Instead, Vodafone NZ is likely to report another fat profit as it reaps the rewards of a hard-fought battle with arch-rival Telecom.

The local firm's revenue jumped from $593 million to $703 million in the year to March 31. Earnings before interest, tax, depreciation and amortisation came in at $270 million, up from $177 million in the previous period.

Managing director Tim Miles refused to indicate profit for the year - that figure will be revealed when Vodafone files its accounts with the Companies Office, probably in September.

Vodafone reported a maiden profit of $41.5 million for New Zealand operations in the previous year.

The present figures show Vodafone NZ continuing to outperform its Australian sister company, which is headed by former New Zealand managing director Grahame Maher and had earnings before interest, tax, depreciation and amortisation of A$379 million ($449 million), up 15 per cent on the previous year.

Miles said that despite a blitz of marketing activity from Telecom surrounding the launch of its high-speed CDMA network, Vodafone had signed up more new customers than its rival in the first part of the year.

"Our net customer adds last quarter were 51,000. [Telecom's] were 9000," said Miles.

"We got 85 per cent of the market last quarter."

Telecom was the largest cellphone operator in the country, with 1.4 million customers at the end of the nine months to March 31 last year, up 9.3 per cent on the previous corresponding period.

Vodafone has 1.1 million customers, a 23 per cent increase on a year ago.

Telecom's cellphone operations had revenue of $865 million in the year to last June 30.

Both Telecom and Vodafone have been faced with flat or declining growth in average revenue per user (arpu).

Vodafone's arpu for the year was $636; Telecom's at the end of March was $520.

Miles would not say what proportion of revenue was made up of data services, revealing only that data revenues had more than doubled in the past year and would be boosted further by the introduction of services such as multimedia messaging.

Miles had no specific date for the launch of multimedia messaging in New Zealand.

A desire to increase data revenue was also behind a partnership with Walker Wireless to test high-speed wireless modems in Auckland.

Walker Wireless says the modems will deliver good-quality VoIP (voice over internet protocol) next year, but Miles said that feature would eat into Vodafone's core cellphone business.

"It's going to cause people not to have fixed telecoms lines in their houses or not have a second phone line," he said.

"It's more of a threat to the fixed-line side than the mobile side."

Despite cellphone retailers reporting a decline in sales of up to 50 per cent since the removal of handset subsidies, Miles said reports from Vodafone's distribution channel showed customers were now buying more expensive phones.



Vodafone Group posted a record pre-tax loss worldwide of £13.5 billion ($41.2 billion), including a £6 billion ($18.3 billion) writedown in fixed-line assets.

The company's shares have lost a third of their value this year.

Miles said that paper losses aside, Vodafone Group's results at an operating level were healthy.

"When you get below the headline bad news and look at the fundamentals of Vodafone, its turnover grew 52 per cent and data revenue is up 87 per cent. What the business is actually doing is unbelievable."