24 Feb 2014

Telecom's first-half results fail to spark

10:49 am on 24 February 2014

Telecom has generated headlines with its plan to change its name to Spark but its first-half results have painted a less-than-sparkling picture.

Telecom's net profit, excluding the now-sold AAPT, fell 12.5 percent to $147 million in the six months to December.

In addition, the phone company's costs are falling at a slower rate than its revenue is declining.

Chief executive Simon Moutter says it's a systemic issue for the telecommunications industry worldwide and Telecom expects to level that out during the full year in 2016.

He says there are early signs of that now, with revenue in the retail business flat for the first time since 2008, which means rising revenue from data, mobile, broadband is offsetting declines in conventional fixed voice and access.

Mr Moutter says a programme is also underway which will continue to take costs out of the organisation.

He says he is confident the outlook from here will improve and is looking forward to a strong second half and an even better 2015.

Telecom, which is planning to change its name to Spark at a cost of $20 million in the six months ending June, has been looking for a way into the television business since as far back as 1995.

That year, it attempted to create a cable TV network in Auckland and Wellington called First TV. In 2001 Telecom bought a 12 percent stake in New Zealand's premier pay TV company, Sky Network Television, only to sell out in again in 2003.

For years, Telecom had a deal with Sky TV to distribute its programmes to Telecom customers but it ended this arrangement earlier this month.

Its latest attempt, an internet TV service named ShowmeTV, will be launched later this year.

Television writer Chris Philpott says content will be key to the channel's survival and it will struggle without exclusive content.

Telecom is planning to spend $20 million dollars on programming. Sky TV spent more than $289.3 million on programming in the 12 months to June last year.