Telstra Saturn merger costs hit Aussie comms company

By Phil Boeyen, ShareChat Business News Editor

Wednesday 16th August 2000

The cost of merging the Telstra and Saturn businesses in New Zealand has had a major impact on the half-year result of Australian communications company, Austar United.

Telstra Saturn is a 50/50 joint venture between Austar and Telstra.

In its half-year announcement Austar says the most significant impact to results was due to the merger of the Telstra and Saturn businesses in New Zealand.

It says the inclusion of the Austar's share of the Telstra business, and certain one time integration costs, account for almost all of the increase in EBITDA losses for the June quarter.

However Austar CEO, John Porter, says Telstra Saturn remains a great story and it would be wrong to view this one off result as a negative.

"First, the Saturn residential business in Wellington continues to perform very strongly, with telephony penetration now over 30% and pay-TV above 20%. The acquisition of the Paradise.net interest business has dramatically boosted subscriber numbers and extended our reach beyond Wellington."

"Secondly, the losses which occurred in the corporate market were expected because they are almost entirely due to interconnect payments to Telecom New Zealand. This result will be dramatically turned around as we move traffic across to the Telstra Saturn network over the next couple of years. This has been demonstrated by the fact that the Wellington business was EBITDA positive in the first quarter."

Austar had a first half 2000 operating loss before tax of A$121.953 million, compared with a loss for the same period last year of A$128.641 million. However the company says the period also saw strong revenue growth.

The company's major holdings are in pay television, mobile data and telephony services, and internet services.

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