Telecom New Zealand flags job cuts

Telecom New Zealand CEO Simon Moutter has flagged that hundreds of jobs are set to go from the telco, after reporting a half-year net profit of NZ$156 million, up from NZ$99 million the previous year, but with a drop in revenue of 9.5 percent.

The comparison is complicated, the company said, because Telecom New Zealand demerged with its fixed broadband wholesale company Chorus at the end of 2011. The original net profit would be NZ$163 million, versus NZ$129 million at the end of 2011.

Moutter reportedly told journalists on Friday morning that job cuts at the telco will be "well into the hundreds", with more details to be announced in the next three months. The company employs around 7,000 staff.

New Zealand Labour IT spokesperson Clare Curren criticised the move to cut jobs, saying that the high-skilled, high-paid positions are of the sort the country's economy needs.

"Where are these workers going to find new jobs? Unemployment is at 6.9 percent, and in the last three months of 2012, 33,000 people gave up on the labour market altogether," she said in a statement. "Their prospects are bleak."

The company's chairman Mark Verbiest said that Telecom NZ is in the process of shifting away from being a fixed and mobile infrastructure company to being more mobile and data centric.

"Behind the headline numbers, our business is changing significantly. Mobile revenue is higher on the back of demand growth, and there has been good growth in net customer connections since the closure of the CDMA network. On the other hand, fixed calling revenue has continued to decline in line with industry trends and following a strategic decision by our Australian unit AAPT to rationalise some low-margin business," he said in a statement.

"These revenue shifts reflect the major global trends as the telecommunications sector is becoming increasingly focused on mobile and data."

The company's Australian business, AAPT, also struggled in the half, reporting a 28.9 percent decline in operating revenue from NZ$370 million in the last six months of 2011 to NZ$263 million in the last six months of 2012.

Telecom New Zealand added 158,000 new WCDMA connections in the half, although the company's total customer base declined due to the closure of its legacy CDMA network. Telecom also added 13,000 new retail broadband connections.

Moutter said that the company's 3G network now covers 97 percent of the New Zealand population, and under the government's Rural Broadband Initiative, Telecom New Zealand would be rolling out 120 new cell sites.