Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


CORRECT: 2degrees narrows 2013 loss

CORRECT: 2degrees narrows 2013 loss; earnings outlook in line with expectations

(Includes equipment sales, gross revenue, finance costs in 6th graph)

By Pattrick Smellie

June 23 (BusinessDesk) - Challenger mobile telephone operator Two Degrees Mobile pared back losses in the year to Dec. 31 and reported positive operating earnings for the second year since its establishment five years ago.

Financial statements filed with the Companies Office show the company made a net loss for the year to Dec. 31 of $35.9 million, down 20 percent on last year's loss of $45.2 million, consistent with 2degrees' business plan that sees the early heavy investment in infrastructure and market penetration give way over a period of years to positive earnings.

Statutory earnings before interest, tax, depreciation and amortisation came in at $35.3 million, compared with $3.8 million in 2012, the first time the company had produced a positive out-turn on an Ebitda basis.

While he would give no guidance on current year earnings or how many more years of losses 2degrees expected to bear before turning profitable, chief executive Stewart Sherriff told BusinessDesk the results were in line with expectations and the previous experience of the company's shareholders, who have rolled out competitive mobile networks in more than 20 other countries.

"We are very patient people," said Sherriff.

The result was earned on gross revenues of $308.7 million, 22 percent higher than the year before, while total expenses, including finance costs, for the year were up 15 percent for the year, to $343.7 million.

Cost of sales, primarily the cost of subsidising mobile handsets to acquire customers, rose from $55.4 million in 2012 to $73.0 million last year, while equipment and other revenue at $45.7 million compared with $34.2 million a year earlier.

Sales and marketing costs at $49.2 million were up almost $10 million on the previous year.

"Our challenge going forward is that, after five years, we have got a fixed opex line," said Sherriff. Variable costs changed on a per subscriber basis, so the job now was to keep controlling those costs while growing revenue lines, especially in the post-paid business consumer market where 2degrees has been slow to gain traction, in contrast with its swift penetration of the lower margin pre-paid market.

Of the total estimated market for mobile telecommunications services of around $2.4 billion, 2degrees now commands around 14 percent of total spend, he said.

Margins were stabilising and the company was "on a trajectory to world class margins."

Sherriff said the experience of a third mobile operator's impact on competition in New Zealand market should be used as "a lesson for other industries."

"The bigger thing for is that you have a plethora of monopolies," he said, citing limited competition among DIY and construction materials suppliers and Sky TV.

While 2degrees may consider its own content offering to drive growth in data usage, Sherriff suggested no move in that direction is imminent, despite Telecom soft launching an internet TV service this month and cable TV operator Sky responding with its own Netflix-style offering.

One area of untapped potential was ethnic content, reflecting the large migrant communities now established in New Zealand from Asia and further afield.

"No one's really satisfying that at this stage."

He said confidence in the company's future was apparent from the fact that the Bank of New Zealand had succeeded in syndicating last year's ground-breaking $165 million credit facility to four other banks. ING, ICBC, Bank of China and Kiwibank now held some $80 million of the facility, while BNZ retained $85 million.

"Four other banks have effectively endorsed the model," he said. "The BNZ could probably have sold down more."

On 4G spectrum allocation, which saw 2degrees secure 10 Megahertz of 700 frequency spectrum, Sherriff said he had "never been so spectrum-rich in any of the markets I've worked in."

While 2degrees continues not to have a fixed line offering, which limits the product range it can sell to businesses, Sherriff indicated no appetite for buying into or investing in such a service, preferring to look for cross-selling partnerships, as it currently does with internet service providers at present.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Cosmetics & Pollution: Proposal To Ban Microbeads

Cosmetic products containing microbeads will be banned under a proposal announced by the Minister for the Environment today. Marine scientists have been advocating for a ban on the microplastics, which have been found to quickly enter waterways and harm marine life. More>>

ALSO:

NIWA: 2016 New Zealand’s Warmest Year On Record

Annual temperatures were above average (0.51°C to 1.20°C above the annual average) throughout the country, with very few locations observing near average temperatures (within 0.5°C of the annual average) or lower. The year 2016 was the warmest on record for New Zealand, based on NIWA’s seven-station series which begins in 1909. More>>

ALSO:

Farewell 2016: NZ Economy Flies Through 2016's Political Curveballs

Dec. 23 (BusinessDesk) - New Zealand's economy batted away some curly political curveballs of 2016 to end the year on a high note, with its twin planks of a booming construction sector and rampant tourism soon to be joined by a resurgent dairy industry. More>>

ALSO:


NZ Economy: More Growth Than Expected In 3rd Qtr

Dec. 22 (BusinessDesk) - New Zealand's economy grew at a faster pace than expected in the September quarter as a booming construction sector continued to underpin activity, spilling over into related building services, and was bolstered by tourism and transport ... More>>

  • NZ Govt - Solid growth for NZ despite fragile world economy
  • NZ Council of Trade Unions - Government needs to ensure economy raises living standards
  • KiwiRail Goes Deisel: Cans electric trains on partially electrified North Island trunkline

    Dec. 21 (BusinessDesk) – KiwiRail, the state-owned rail and freight operator, said a small fleet of electric trains on New Zealand’s North Island would be phased out over the next two years and replaced with diesel locomotives. More>>

  • KiwiRail - KiwiRail announces fleet decision on North Island line
  • Greens - Ditching electric trains massive step backwards
  • Labour - Bill English turns ‘Think Big’ into ‘Think Backwards’
  • First Union - Train drivers condemn KiwiRail’s return to “dirty diesel”
  • NZ First - KiwiRail Going Backwards for Xmas
  • NIWA: The Year's Top Science Findings

    Since 1972 NIWA has operated a Clean Air Monitoring Station at Baring Head, near Wellington... In June, Baring Head’s carbon dioxide readings officially passed 400 parts per million (ppm), a level last reached more than three million years ago. More>>

    ALSO:

    Get More From Scoop

     
     
     
     
     
     
     
     
    Business
    Search Scoop  
     
     
    Powered by Vodafone
    NZ independent news