Telecom says there will be job cuts "well into the hundreds"
this year as it seeks to reduce costs across its business.
The company this morning reported adjusted net profits of
$156 million for the six months to December 31, up 57.6 per
cent from the year before.
As with all of Telecom's results since its split with lines
operator Chorus, the company stressed that comparisons with
previous periods were complicated by the demerger.
Telecom and Chorus split in late 2011, so Chorus could take
part in the Government's rollout of a high-speed fibre data
Asked when there would be more information known about the
job cuts, chief executive Simon Moutter said the company was
"clearly very concerned about the impact of these decisions
on our people and the right thing to do in any organisation
is to get to the plans worked out properly to work that
through with our people first and to treat them with the
greatest respect with this process".
"What we do know without sugar-coating this is that it is
apparent it will be a number well into the hundreds. I can't
be more specific than that right now but we will be a in a
position to share more information over the next two to three
Moutter said there was no area of the business that had not
been asked to "look hard at everything we do to make sure we
remove the legacy culture - layers of middle management, the
duplication of effort and find a way to make a contribution
to get our cost base more competitive".
During a conference call this morning, Moutter said Telecom's
cost-base "unfortunately remains uncompetitive".
He said Telecom had a higher cost-base and the company
employed more people than similar companies in the telco and
Moutter said there was no point waiting to implement changes
until the next financial year.
"We believe we must move quickly," he said.
Telecom, which employs around 7000 people, also this morning
reported adjusted earnings before interest tax, depreciation
and amortisation of $506 million for the half year period, up
3.7 per cent from the six months to December 2011.
Its adjusted first-half revenue of $2.1 billion was down 8.5
per cent on adjusted revenue from the same period the year
before. It is paying an interim dividend of 8 cents per
In a statement, Telecom chairman Mark Verbiest said the
company had begun a strategic shift from being a fixed-line
and mobile player to a "competitive, future-orientated mobile
and data-centric service provider".
"Behind the headline numbers, our business is changing
significantly. Mobile revenue is higher on the back of demand
growth and there has been good growth in net customer
connections since the closure of the CDMA network.
"On the other hand, fixed calling revenue has continued to
decline in line with industry trends and following a
strategic decision by our Australian unit AAPT to rationalise
some low margin business.
"These revenue shifts reflect the major global trends as the
telecommunications sector is becoming increasingly focused on
mobile and data," Verbiest said.
The company is due to give a more in-depth update on its
strategy in May.
Moutter said it had added 103,000 mobile customers since
August - after it closed the older CDMA network last year.
That would put the total number of Telecom mobile connections
at around 1.7 million.
After announcing the company hoped to stabilise its slipping
market share in broadband last year, Moutter said today that
Telecom had gained 13,000 customers in this area in the six
months to December.
He called this "a good performance in the context of an
intensively competitive marketplace".
Telecom has around a 50 per cent share of the broadband
- Hamish Fletcher of the New Zealand Herald