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19 Mar 2018 6:01
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  •   Home > News > Technology

    Chorus 1H profit hit by competition

    Telecommunications network operator Chorus says first-half profit is down 29 per cent as customers work on paying less for wholesale services.

    Chorus has 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's wireless technology, and has signalled plans to trim its workforce by a tenth.

    Net profit fell to $47 million in the six months ended December 31 from $66m, a year earlier, it said on Monday.

    Revenue fell 5.7 per cent to $499m as gains in sales of fibre-based connections couldn't 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 fell 9.7 per cent to $329m.

    Chief executive Kate McKenzie says successes in mitigating customer losses means she expects full-year ebitda to be at the top end of the $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," she said.

    Chorus has been facing heightened competition for broadband 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 Ms 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 that seeks to cut Chorus's 971 permanent and fixed-term employees by about 10 per cent.

    "As such, we anticipate further benefits to labour costs and other cost lines in the second half as we continue to focus on ensuring our cost base is sustainable," she said. "We also anticipate that improvements will have a commensurate positive impact on the customer experience."

    The shares last traded at $3.75 and have dropped 11 per cent so far this year.


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