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AAPT contributes to Telecom earnings drop

AAPT contributes to Telecom earnings drop

The $60 million sale of AAPT's Consumer Division to iiNet contributed a $7 million loss to Telecom's EBITDA

The $60 million sale of AAPT’s consumer division to iiNet (ASX:IIN) led to a loss of $NZ7 million ($A5.33 million) to Telecom NZ's earnings before interest, tax, depreciation and amortisation (EBITDA) for the first half of the financial year, New Zealand's incumbent telco has reported.

In a statement to the ASX, Telecom NZ’s (ASX:TEL) half yearly earnings for the six months to 31 December 2010 posted a net profit after tax of $NZ158 million, a drop of 35 per cent, while EBITDA fell 0.5 per cent to $868 million for the period.

The sale of AAPT's consumer division last year provided iiNet with 113,000 residential customers and 364,000 total active services with bundling included, making the Perth-based ISP the second largest DSL provider. According to Telecom's latest financial results, the sale provided a gain of $NZ18 million ($A13.71 million) but AAPT's operating revenue had declined by $A83 million to some $375 million in the half year to 31 December 2010.

According to the company's results, $42 million of the division's decline was the net reduction as a result of the loss of revenues from calling, broadband and internet services. The ISP’s EBITDA also declined to $38 million, a drop of $18 million when compared with the same period 12 months prior.

According to Telecom chief executive, Paul Reynolds, the group's EBITDA was affected by Telstra’s renegotiated wholesale terms which he claims reduced volumes and the sale of its consumer business.

“This reduction was driven by lower volumes due to the sale of the consumer division, lower volumes in Wholesale and Business due to customer churn and the effect of renegotiated commercial terms,” the statement to the ASX reads.

Company capital expenditure was recorded at $39 million, $15 million higher than 12 months previously during which a number of projects were deferred, however following the sale of its Consumer Division the ISP expects overall spend should be lower in the coming half year.

As reported by Computerworld Australia, iiNet recently confirmed a number of staff cuts to the company, action the ISP’s chief regulatory officer, Steve Dalby attributed to “rapid growth and recent acquisition”, including AAPT.

Follow Chloe Herrick on Twitter: @chloe_CW

Follow Computerworld Australia on Twitter: @ComputerworldAU

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