ElectrosmartNET BLOG

The reportedly $A150 ($NZ180 million) a year exclusive distribution contract between Cellnet, a listed Australian mobile phone company and Telecom NZ will end September 30 2008.

Cellnet Group distributes mobile phones and accessories for Telecom, but the agreement will terminate in advance of Telecom NZ’s new WCDMA/GSM network rollout, due in November.

The Cellnet and Telecom NZ distribution contract was signed in 2002, with Telecom NZ becoming the distributor’s single largest customer. The impact on Cellnet,s revenues [$A528.2 million last year] is significant.

Telecom is declaring it is in control with a 2 year loss containment plan underpinning a long term growth strategy, and fronted by its IP platform strategy. Telecoms CEO, Dr Paul Reynolds announced the long term plans for Telecom at its annual management briefing in Sydney.

Key points:

• Core earnings will moderate during the next two years, followed by a return to growth.
• “Investing for long term health and to drive bottom line growth.
• Containment of near-term decline in EBITA to 4-6 percent - FY June 2009 and 0-2 percent FY June 2010.
• Growth of 4-6 percent a year FY 2011 to FY2013.
• FY2008 Forecast Net Profit $700 million to $730 million.
• NZ EBITA – declining 7-8 percent
• Australian EBITA – $A70m ($NZ82.4m) to $A80m
• Group ebitda guidance – $1.88 billion to $1.9 billion.
• Capital expenditure – $975m.
• Capex FY2009 $1 billion to $1.1 billion
• New management team – including new CFO Russ Houlden to drive a customer-focused culture
• An all-internet protocol (IP) platform for efficiency and innovation
• Moving to a lower cost operating model – more competitive

The Communications and Technology Minister David Cunliffe last week approved the plan to broke Telecom up into three separate divisions:  Network access [Chorus], Wholesale and Retail operations