TNZ’s Theresa ticks off Telstra

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Telecom New Zealand chief Theresa Gattung has used the company's quarterly results announcements to blast New Zealand's ACCC-equivalent Commerce Commission and rival TelstraClear, saying they are jeopardising Telecom's investment in the Kiwi national infrastructure.

Last week, the watchdog set NZ$1.13 per minute as the maximum price Telecom and rival TelstraClear can charge each other for carrying each other's toll calls. The new rate is less than half of what Telecom had been charging.

"We are not happy about the interconnect decision or the process," Gattung said.

"Everyone knows we make a lot of money. We make a lot of money because we invest a lot of money," she said. "It is ridiculous to think that this spend will be matched by another player."

"Why should Telstra get a free ride on our investment," Gattung said. "We have no problem with competition and are prepared to take on all comers, but they don't need a leg up."

Gattung said Telstra has become less aggressive in the past few months. "They may have had a 'road to Damascus conversion' as they claim, but its more likely part of their strategy to enable full privatisation of Telstra," she said.

Gattung said Telecom was surprised by the recent visit of Telstra chairman Bob Mansfield to New Zealand, "and his drive by shooting of all things Telecom".

Telecom reported a 3.3 percent fall in first quarter net profit to NZ$146 million, which was at the lower end of guidance. Operating revenue for the quarter dropped 7.1 percent to NZ$1.3 billion.

Gattung said the company is "not uncomfortable" with the flat revenue performance of the business and internet side of the Australian business. She said the company expects the benefits of TCNZ's Australian operations to start showing benefits in the second half of the financial year. The company, she said, is focussed on perusing opportunities with current customers.

However, revenue from the Australian operations fell 14.4 percent to NZ$391 million, which Gattung attributed to focusing on high value mobile customers, saying the company is now ready to again "push the button" on subscriber growth.

Gattung said she expected sequential EBITDA growth to resume in the second half of the financial year.

"We're satisfied with the underlying momentum and confident [the Australian business] will remain cashflow positive over the coming period," she said.

However Telecom chief financial officer Marko Bogoievski said the company may be forced to provide additional support to Southern Cross Cable Network, which it owns in partnership with Singtel and WorldCOm.


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