Vodafone NZ boosts profit 16% as settlements take sting out of regulation
(BusinessDesk) Vodafone New Zealand, the country's biggest mobile phone operator, boosted annual profit 16% after reaching settlements with rival Telecom, taking the sting out of its warning that regulation would eat into this year's earnings.
Net profit rose to $175 million in the 12 months ended March 31 from $151.5 million a year ago, according to financial statements lodged with the Companies Office. That came as revenue fell 4.3% to $1.62 billion.
That was better than what Vodafone foreshadowed last year when it said sales would fall $124 million and comprehensive income by $55 million due to the Commerce Commission imposing a reduction in mobile termination rates, the fees carriers charge each other for ending a call on a rival network.
The revenue figure was swelled by Vodafone's share of a $31.6 million settlement Telecom made over allegations it had treated buyers of its wholesale network access on discriminatory terms.
Vodafone has been shedding customers since 2 Degrees Mobile entered the market in 2009, losing a further 41,000 clients in the June quarter in its sixth straight quarterly decline. It is still the biggest local carrier with 2.37 million customers.
The mobile phone company is in the process of buying fixed-line operator TelstraClear, the New Zealand unit of Australia's Telstra Corp, for $840 million.
Vodafone expects to slash back-office duplication and use TelstraClear's backhaul and transmission services, as well as cutting its reliance on Chorus, the former Telecom network company.
The sale is contingent on regulatory approvals, with the Commerce Commission expected to make a decision later this month.
Vodafone ramped up its dividend for a second year, making a $180 million payment to its shareholder.
Last year it nearly tripled its return to the British parent with a $130 million payment, having suspended dividends for the two prior years.