Thursday, February 02, 2006
I hate telecom - Part 2
Don't make me angry - you wouldnt like me when I'm angry......
"I killed the president of Paraguay with a fork. How've you been?"
Truely, it pissed me off when I see telecom's share price rising on the back of crap emphasis in the media.
telecom shares rose 10c, or 1.8 per cent, to $5.76 in early trading today despite the telco reporting a $466 million half-year loss.
Read that carefully..... Shares rise - after telecom report a half billion loss.
"Not so much the financials, but the mobile and broadband numbers. Both have surprised on the upside very nicely."
telecom chief executive Theresa Gattung said mobile connection growth was strong in the quarter, with 135,000 new connections.
telecom picked up 38,000 new broadband customers in the quarter, about 35,000 of which were residential.
telecom said it expected double digit growth in mobile voice and data revenue to continue.
OK lets deal with some of these issues separately.
38,000 Broadband customers. Does that include the onselling of Broadband to Telstra in the 11th hour deal that stopped impending government intervention?
Also I am connected to IHUG but my ADSL connection has to be through telecom (I have no choice). So I guess I'm included in those numbers - if I was a new connection. The current arrangement is bad for any non telecom customers.
Example: Last week my ADSL fell over - I used to be a telecom tech so I was able to determine the fault lay with telecom's DSLAM. Yet when I reported the fault to telecom thay told me to report the fault to my ISP (even though I knew the problem was with telecom). In short you cant report an internet fault with telecom unless you are an Xtra user. In the end I had to report a line fault to get this problem fixed - even though I knew my line was OK.
My second bug bear is their mobile connection numbers. This is bollox - and regardless of what any cell company tells you, the number of cellular connections is unrelated to the company's revenue bottom line.
Example: I honestly believe the high number of recent connections to telecom mobile is due to their $10 TXT promo. Ok so lets see, assuming these kids are canny, and god knows NZ kids are smart when I comes to money, telecom are most probably making little more than $10 a month on most of those connections. The major indicator of a companies sucess is ARPU. That is ARPU is an acronym for Average Revenue Per Unit or Average Revenue Per User. It is the revenue generated by a customer phone, pager, etc., per month.
Basically stated the higher the ARPU, the more successful your company is. By telecom putting a cap on their ARPU from TXT, they will have to increase their mobile ARPU by stimulating growth in their voice and data areas. I can just see kids/adults that sign on to $10 TXT doing that.
The only shining light for telecom's wire network is their dominance in the local loop (wires in the ground), but in time the revenues from this medium will drop as cellular use increases due to higher data speeds and lower costs. Personally I believe it's time the local loop was deregulated, but telecom has survived thus far with minimal compliance, and I expect this to continue for some time yet.