AAPT cuts costs as revenue falls again

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AAPT cuts costs as revenue falls again
David Yuille, chief executive of AAPT.

Blames 'intense price competition'.

AAPT has blamed intense price competition for its latest set of weak results, with the number of employees and contractors continuing to be reduced as the telco seeks to cut costs.

The results for the Australian subsidiary of Telecom NZ showed a 20.8 percent drop in earnings, from NZ$48 million for the second half last year, to NZ$38 million (A$36 and A$30 million respectively) for the last financial period.

Revenue for AAPT is down from NZ$294 million to NZ$252 million (A$227 million and A$205 million), a decline of 14.3 per cent in the most recent half-year.

AAPT grew data revenues after acquiring DSL provider Nextep from NEC last year, but chief Telecom NZ executive Simon Moutter noted that intense price competition meant the telco experienced a decline in earnings before tax and deprecation, albeit at a slower rate than before.

Telecom NZ said in February this year that AAPT would drop low-margin customers and cull an unknown number of staff. The results show continued declines in costs at the Aussie telco.

Operating expenses dropped from A$191 million in the second half of the 2012 full year to A$175 in the most recent one, with the number of full time employees and contractors dropping from 765 to 720 at AAPT.

Source: Telecom NZ
Telecom NZ continues cost cutting

AAPT's parent group also registered lower earnings, down 8.1 percent to NZ$4.174 million (A$3,630 million) and a slight fall in earnings before income tax and depreciation to NZ$922 million (A$802 million), down half a percent.

Having taken an axe to expenses this year, new chief executive Moutter was able to post a 10.3 percent cost reduction however, and a 21.7 percent increase in net earnings, taking these to NZ$281 million for the latest financial reporting period.

The company has over one thousand fewer employees as of June 30 this year, down 16.2 per cent compared to the beginning of 2013.

A bright note in Telecom NZ's latest results are the Southern Cross Cable System dividends which are up to NZ$37 million (A$32.2 million) from NZ$32 million (A$27.8 million)  a year ago.

Moutter signalled that a tight lid will be held on costs for the future, so that Telecom NZ could become competitive. 

However, in the full year 2013, capital expenditure rose 18.6 percent to NZ$465 million (A$404.5 million) as Telecom NZ bought 3G mobile spectrum, reengineered internal IT infrastructure and pulled forward investment in a new optical transport network for its core connectivity.

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