WELLINGTON: Falling revenue and a final year of substantial costs for integrating with the Telstra Clear business led to Vodafone’s New Zealand unit turning in annual loss of $NZ120.7 million ($A109.77 million).
That compared with a $NZ29 million loss declared in the previous year and a $NZ55.9 million tax-paid profit in the year to March 2013.
Vodafone bought the New Zealand operations of Australian-owned Telstra in November 2012, most of which covered a period before Vodafone bought the fixed line and broadband assets of Telstra in November 2012.
The result was in line with expectations, said Vodafone NZ chief executive Russell Stanners. Parent company restrictions prevented him making outlook statements, he said. “We’re very comfortable with our performance overall,” he said.
Revenues were down 4.4 per cent to $NZ1.97 billion from $NZ2.56 billion in the previous financial year, reflecting price competition eroding cash flow even as demand for data continues to explode. “We think there are signs of (prices) stabilising,” said Mr Stanners.
“Volume growth of 80 to 100 per cent (in data demand) eventually finds its way through to what customers pay us. What you are starting to see is that as customers see great value, they start to pay a little bit more on the average.”
Operating expenses fell during the year by $NZ25.4 million to $NZ639.3 million, reflecting operational efficiencies, with staff costs falling from $NZ314.9 million to $NZ295.5 million. However, that fall masked the final year of one-off costs associated with the Telstra integration, with operating expenses expected to fall further next year.
The Testra purchase gave Vodafone NZ fixed line voice and broadband services to add to its mobile offering, which Mr Stanners says remains more profitable than the mobile business operated by its primary competitor, Spark New Zealand.
Telstra had doubled Vodafone’s New Zealand staff numbers and added 50 per cent to its revenue while not being profitable when it was purchased, said Mr Stanners. The integration had, however, allowed Vodafone to cement itself as number two in the New Zealand market for mobile and fixed line services.
