Broadband demand lifts profit for Telstra

TelstraClear chief executive Allan Freeth says he has yet to see any "green shoots" in the economy but strong demand for broadband helped the company increase its revenues and profits.

Sales in the year to June rose 2.8 per cent to $703 million, while profit before interest and taxation more than doubled to $18m.

Net profit would be significantly up on last year's $21.8m, chief financial officer Michael Boggs said. Analysts have argued that TelstraClear is treading water in New Zealand. Mr Boggs admitted parent Telstra still had "a way to go" to get an appropriate return on its investment.

Dr Freeth said the company's decision not to respond to the downturn by cutting back on advertising and promotions had proved "key" to what he praised as a strong result.

TelstraClear had doubled its number of new broadband customers and consumer sales were up 20 per cent. "People aren't prepared to give up their broadband, or their mobiles or texting. It seems to be a very important part of their lifestyle."

Growth in consumer sales offset the impact of "customer churn" in the business market as some small firms succumbed to the recession.

"We saw throughout this year a lot of pain. I think that has blown down in terms of receiverships, but what we are not seeing is any strong confidence."

TelstraClear cut capital expenditure from $113m to $96m and staff numbers have fallen to 1300, from 1400 two years ago.

- © Fairfax NZ News