Telecom pushes new strategy, delivers few details

Update 1.45pm: Simon Moutter signals job losses; Gen-i’s earnings down on previous half-year result

Update: 1.45PM

Telecom chief executive Simon Moutter said the company would cut "hundreds" of jobs over the next 10 months, but he would not talk numbers today.

Asked whether that meant jobs cuts would be limited to three figures and no more than 1000 jobs were on the line, Moutter said he was "not willing to be any more specific at this point".

More details on the long-expected cuts were likely by May.

The job cuts would result in a "material one-off charge" this financial year, he said.

Moutter said that while he was "not going to share numbers today", he was not going to try to downplay the likely scale of the cuts.

Telecom employs more than 7000 workers. The general mood among staff was "if we are going to do it, let's get on with it", Moutter said. Staff outside Telecom's Wellington building declined to comment when approached this morning.

Original story

Telecom management is moving quickly to develop a new corporate strategy, according to chair Mark Verbiest in the company's half-year results announcement. But details on the strategy are unlikely to be released until May.

The company reported a net profit of $163 million for the six months to December 31.

On an “adjusted basis” profits rose 57.6 percent to $156 million while revenues were down 8.5 percent.

The company says comparisons with previous period are complicated by the demerger of Chorus, which occurred in December 2011.

Earnings before interest, tax, depreciation and amortisation (EBITDA) were $516 million, down from $1.6 billion during the same period in 2011 when Chorus was still part of the business, but Telecom said that on an adjusted basis they were up 3.7 percent.

Verbiest has emphasised Telecom’s new strategic focus shift from a tradtional fixed-line and mobile infrastructure telco, “to a “future-oriented 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,” Verbiest says in a statement.

“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."

“In recognition of these new business realities, management is moving quickly to develop and implement a new corporate strategy. More details will be shared with investors in May."

Telecom CEO Simon Moutter noted the ICT enterprise market has become more competitive.

“Telecom’s ICT services division Gen-i experienced continued price-based competition and is focused on exiting low margin business and delivering cost reduction initiatives. Gen-i maintains a leadership position in business markets, with a strong market share position in mobile among business customers,” Moutter says.

“We see good opportunities to strengthen the suite of ICT solutions delivered over our networks and, increasingly, via the cloud – not just for Gen-i’s traditional customer base, but also for smaller and medium sized businesses serviced by either Gen-i or our retail business.”

EBITDA for Gen-i was $186 million, down 1.6 percent when compared to the previous half-year result.

Raw data: Telecom's H1 FY13 Half Year Report, investor presentation etc.