Two Degrees revenue, tax credits boost profit 33%

AUCKLAND: Telecommunications provider Two Degrees Mobile lifted net profit 33% in 2017, as revenue gains outpaced costs and the bottom line was boosted by tax credits.

Net profit rose to $19 million in the year ended December 31, from $14.3 million in 2016, on a 4.3% revenue gain to $732.7 million. Expenses excluding finance costs rose 4.1% to $665.4 million, while the company cut finance costs 10.5% to $25.8 million in the year.

Two Degrees benefited from a $1.5 million income tax credit in 2017, compared to a $4 million credit a year earlier when it posted its first profit.

Between establishment in 2009 and the end of 2015, the company clocked up accumulated losses of $396.8 million as it invested heavily in a national mobile network and moved into fixed line telephone and broadband services to allow it to compete across the full range of telecommunications services. By the end of 2017, its 4G coverage reached 96% of the population, up from 79% in the previous year.

‘‘The results for 2017 were impacted by the introduction of a new business support system in February 2017,’’ a representative said. ‘‘This created service challenges that impacted sales activity and subsequent revenue growth. The situation has since been resolved.’’

The company reported a $2.3 million gain on foreign exchange rate movements in the year, up from $862,000 in 2016.

Major shareholder Trilogy International Partners, a Toronto Stock Exchangelisted company which owns 73.2% of Two Degrees, said in a firstquarter release published on May 5 that the business added 5100 net postpaid subscribers as at March 31, lifting numbers to 401,200. It dropped a net 42,500 prepaid subscribers in the quarter, bringing that number to 982,600. Its postpaid customers are more valuable, bringing in an average of $36.32 ($NZ51.98) per user per month compared to $US7.98 for prepaid customers. — BusinessDesk