XT failures drive away customers

Telecom Paul Reynolds. Photo / Dean Purcell

Failures on Telecom's XT mobile network this year have weighed heavily on mobile customer acquisition.

At the company's full-year results briefing yesterday, chief executive Paul Reynolds said the company had lost 120,000 mobile connections to competitors during the past quarter and 20 per cent of those leaving were higher value on-account customers.

Reynolds said as well as churning off phones gifted as Christmas presents that hadn't been used since, Telecom was also seeing some lag effects from the XT disruption.

Reynolds said "pretty heavy marketing" had seen acquisition numbers stabilising in July.

"We've come through the quarter that would be the most awkward given the experiences over the past year."

Telecom yesterday reported a 20.9 per cent fall in its adjusted full-year net profit to $382 million, with revenue down 6.3 per cent to $5.27 billion.

Adjusted ebitda for the year to June was $1.76 billion.

Shares closed yesterday down 7c at $2.03.

GS JBWere analyst Tristan Joll questioned how the company could generate the growth it wanted in the mobile space.

"You can see some of the benefit of XT and the fact that some of the people who are using it are spending more on data, but that sort of subscriber hit is going to take some time to come back from," said Joll.

Forsyth Barr analyst Guy Hallwright said the average revenues per user (ARPU) for mobile was down, partly because of rebates and credits given to customers during the network outages, but that should begin to look better.

"The customer numbers are a bit of a disappointment. Prepaid, low-value customers don't really matter that much and most of the drop was in those but the contract customers dropped as well whereas Vodafone grew, which is a bit of a worry. So I guess that says that XT hasn't yet got past its issues early in the year and now all eyes are on how it goes now they've started promoting it strongly again."

While Telecom is precluded from talking about the details of the proposal it has tabled for participating in the Government-backed fibre broadband network, Reynolds said if it got the nod, investors could be voting on a company split by as early as mid-2011.

Chief financial officer Russ Houlden said the company had put forward a package proposal that included commercial, regulatory and legislative elements.