Chorus profit falls 29% as fight for customers intensifies
Chorus reported a 29 per cent decline in first-half profit as the telecommunications network operator faced heightened competition for customer connections from the likes of Spark New Zealand’s wireless technology, and has signalled plans to trim its workforce by a tenth.
Net profit fell to $47 million, or 10c per share, in the six months ended December 31 from $66m, or 14c, a year earlier, the Wellingtonheadquartered company said.
Revenue fell 5.7 per cent to $499m as gains in sales of fibre-based connections could not make up for declines in copper-based revenue, with total connections down 7.1 per cent to 1.56 million.
Earnings before interest, tax, depreciation and amortisation (ebitda) fell 9.7 per cent to $329m. Chief executive Kate McKenzie said successes in mitigating customer losses meant she expected full-year ebitda to be at the top end of $625m-650m guidance range.
“While the impact on revenue of lost lines from previous periods was apparent in the financial results this period, it was pleasing that the line loss trend showed signs of abating during the half,” McKenzie said.
“Ensuring line loss trends continue to improve will be strongly influenced by the improvements we continue to make in customer experience.”
Chorus has been facing heightened competition for broadband the connections from its biggest customer, Spark, which has been heavily marketing a hybrid fixed wireless technology as an alternative to traditional copper-based services in an effort to cut its wholesale cost to access the network operator’s lines.
Since McKenzie took over the reins last February, the network company has embarked on a strategic review of the business to weigh up industry developments and new technology.
One of the major initiatives to come from that review is a new operating model to trim its workforce by 10 per cent from a peak in August last year. Chorus had 971 permanent and fixed-term employees as at December 31, and is most of the way through that reduction which should lower headcount to about 950 and generate annual savings of $10m to $12m.
“As such, we anticipate further benefits to labour costs and other cost lines in the second half,” McKenzie said. — BusinessDesk