TelstraClear reveals $106m loss in 6 months to June

By NZPA

Monday 4th November 2002

TelstraClear, 58 percent owned by Telstra, today revealed it lost $106.7 million in the six months to June 30.

That compares with $288 million lost by TelstraSaturn in the 12 months to June 30 and including one month of Clear Communications trading, which the former took over to form TelstraClear.

Revenue grew to $305.6 million compared with $216.6 million in the prior period.

Total equity of $103.9 million in January dropped to negative $2.7 million by June 30.

The figures filed with the Companies Office are more detailed than information released last month by Telstra, which showed TelstraClear lost $137 million in the seven months to June 30 on revenue of $356 million. TelstraClear had earnings before interest, tax, interest, depreciation and amortisation of $18 million.

Telstra recently refinanced $600 million of TelstraClear debt under a certain amount of duress, according to some reports.

The company declined to give a breakdown of customer numbers or market share but chief executive Rosemary Howard said business was "on track", and the company expected to turn a full profit by the end of 2004.

In September, the telco said it had 50,000 residential customers connected to its networks in Wellington and Christchurch.

When TelstraSaturn and Clear Communications merged in a $435 million deal last November, Mrs Howard said she expected the new company to be profitable in two to three years -- a limit she is still committed to.

TelstraClear is pinning much of its hope on winning favourable rulings from the Telecommunications Commissioner, Douglas Webb, tomorrow.

The commissioner is ruling on interconnection fees, contributions to Telecom's Kiwi Share Obligation and wholesaling of retail services.

Better terms on pricing would give TelstraClear the foothold it needed to make inroads against Telecom, but analysts have said the business case for TelstraClear being in the market at all was marginal.

Meanwhile, TelstraClear has called for expressions of interest from network equipment suppliers wanting to help it develop the 3.5GHz spectrum it bought in recent auctions.

Mrs Howard told Infotech that building a network was one of three options the telco has on the mobile front.

It has been retailing the Vodafone network but ideally wants to become a "virtual mobile network operator", which would require a deeper relationship with Vodafone, letting TelstraClear add substantial business "smarts" to its existing resale agreement.

The spectrum, once developed, would give TelstraClear access to 85 percent of New Zealand for wireless local loop offerings, allowing it to offer wireless data and voice products initially to business customers.

But the first preference is to nut out a relationship with Vodafone which it has been struggling to do for some months.

A third option is to import some solutions from other Telstra mobile ventures in Asia to develop its mobile services.

TelstraClear is keen to fill gaps in its offerings, and is also happy to wholesale its own network to others. It is talking to TVNZ subsidiary BCL, along with the Vodafone/Walker Wireless consortium, about using each other's networks.

It would also like to offer higher-speed DSL on Telecom's network, subject to suitable wholesaling rates being struck. Mrs Howard said TelstraClear was very interested in the regional broadband initiatives, despite its name not appearing on any regional shortlist so far.

She said the telco could operate either as a retailer or wholesaler in the regions. Mrs Howard's chief concern is that the Government's tender process doesn't encourage monopolies in each region.

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