Telecom New Zealand - A Quiet Achiever
In the previous financial year Telecom New Zealand (TNZ) suffered a surprise operating loss, the first in its trading history, due to the poor performance of its acquisition AAPT in Australia.
I had not paid any real attention to TNZ since noticing that loss, except for the changes in management and positioning of AAPT and its apparently better performance.
However when recently having a conversation with Michael Tyler, a Director of TNZ, he quietly mentioned that TNZ is performing very well on the global stage of telcos. This is something that I had not thought about in the context of global performance, and it took me a little by surprise.
In fact it seems that TNZ's chief executive Theresa Gattung, "is beginning to enjoy the golden run she has craved for so long" (according to the NZ Herald).
In February 2004 TNZ's management team delivered news of a NZ$365 million interim profit and a long-anticipated dividend lift, and a new payout policy of 70% of net profit. The balance sheet is far stronger after cuting debt by $902 million in 2003 to $4.1 bn, the operating costs are reducing, and the cashflow 'sturdy'.
While the traditional wireline business is providing the lion's share of revenue, data, internet and solutions revenue picked up 15.3 per cent to $339 million, with a 100 per cent jump in private, office and high-speed data services.
Telecom's mobile revenue grew 8 per cent to $333 million and its mobile data revenue jumped 75 per cent.
Some 90,000 Telecom customers now subscribe to broadband, up from 54,000 a year ago. The rate of converts from dial-up internet to broadband had "doubled". This increase is laudable however the absolute number has been lambasted by some critics as too little too late and as recently as March 2004 new statistics on fast internet takeup show New Zealand falling further behind Australia in the race to get broadband telecommunications.
Both countries are laggards in broadband uptake compared to the powerhouses of South Korea, Taiwan and Japan, but growth figures from the DSL Forum show Australia is about to leave New Zealand in its wake.
Ms Gattung promised an emphasis on broadband take-up this year, which she said was important to growing gross domestic product.
The squeeze on the wireline business, and the effect of Regulation chipping away at the bottom line, have sharpened the focus on the technology and investment strategies for a Next Generation Network.
This NGN will not be a replacement of the whole PSTN network, as some advocates of IP would contend is the only way forward, but a blend of existng PSTN and new IP networking with range of new value-added and 'convergent' features. For incumbent telcos generally this description would fit all their strategies, however it is said that TNZ are very well advanced in both their thinking and their potential implementation.
"We're not just sitting here as a target for competitors. We're trying to shift the business." said Gattung in a newspaper report.
Coming around the full circle to where I began this blog, it now seems that Telecom's Australian operation AAPT is no particular cause for concern and is generating $100 million of positive cashflow.
More on the telecoms industry at www.digitalinvestor.com.au
The Telco of the FutureWhat's your take on Telecom NZ, do you agree Next Generation Networks need to embrace the PSTN for the foreseeable future, and what does this mean from a technology perspective? Post your Comments.
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