NBNCo can't count on AAPT fibre assets

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NBNCo can't count on AAPT fibre assets

AAPT remains unconvinced of the benefits of vending some of its fibre assets into the National Broadband Network in return for an equity stake.

Speaking at the Telecom NZ management day via webcast, chief executive Paul Broad said the NBN and associated investments would be good for AAPT, but he would leave decisions over contributing some of its wholesale assets to it to Telecom executives and the Board.

"I'm not sure what the attractiveness is but it's ultimately a decision for [Telecom]," Broad said.

"I think having a major player other than Telstra - who are difficult getting to - will be good for us, having a regulator set prices across the board will be good for us and having more regional backhaul in place will also be good for us."

Broad said that apart from the much touted $43 billion price tag for the NBN, his concerns are the much the same as any other ISP currently investing in DSLAMs.

"We have some debate over the role for us and others that are investing heavily in infrastructure in [terms of] the NBN," Broad said.

"We don't want to end up with stranded assets in the process of the Government achieving a social policy outcome."

On its own business, Broad was open about AAPT's continuing challenges in building a viable consumer business.

He believed the company had "turned a corner", but admitted "results are still mixed on how we can sell" into the consumer space.

"We've been out of the market place for 12 months until we could get our platform settled," Broad said. "We're really going into the market aggressively now but our ambition isn't to have huge growth that outstretches the market.

"We want to have steady revenues, create upsell opportunities in the customers we've got and get our churn rates down."

Despite a clean-out of low and no-value customers over the past year, Broad said AAPT's consumer business is "still burning more customers than we're winning."

"Our problem child has always been consumer," Broad said.

"We've churned a large number of customers we didn't make any money from by putting prices up.

"Traditionally, AAPT never had a contract on the customer - we were cheap and cheerful. People used to sign up, get the free modem for ADSL services and then churn away."

AAPT is currently cleaning out its mobile-only customer base. Monthly access fees previously were as low as single digit dollar fees, which included an allowance of calls.

"A large part of the churn is where we'd expect it to happen but to be successful we really now have to grow," Broad said.

The telco has made a number of changes on the consumer side of the business. They include the bedding down of a $100 million customer management system called Hyperbaric, the establishment of the consumer division as a business in its own right internally, and the launch of new products, including ‘unlimited' ADSL2+ plans.

Some 70 per cent of customer accounts have been migrated across to Hyperbaric, and the remaining customers will be migrated before the end of the year, Broad said.

AAPT is also focused on driving more customers ‘on-net', negotiating better supplier and outsourcing deals, and retiring legacy systems.

"We're going to close down a big engine called Mega which has been going since 1992," Broad said.

"Closing that in the next 12 months will be a big cost-out for us."

Broad also said AAPT was on the cusp of launching IP VPN products.

"The gorillas are coming at us in the wholesale space," Broad said. "Being competitive is very important."


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