This afternoon I crawled out to Auckland’s Greenlane to catch up with Yellow Pages Group chief executive Bruce Cotterill and CFO David Stewart.

The pair were putting their spin on the group’s net loss, due to be published on the Companies Office website shortly (see NBR’s report on the numbers here).

Beyond the balance sheet, I brought up two issues: off-shoring the 018 calling service to Manila, and whether yellow.co.nz could ever reach the scale of the directory company’s print business.

By any measure of customer service, the move was a disaster, as chronicled by NBR and other media.

Mr Cotterill is still unapologetic about the commercial logic for the move.

When Telecom sold its directories business to the Ontario Teachers’ Pension fund and a Hong Kong investment fund in 2007, it included a 10-year provision (stemming from the telco’s own obligations to the government) that the 018 calling service be maintained, with no increase in charges beyond the rate of inflation.

“We can’t put the price up to a level that would sustain it out of New Zealand,” said the Yellow boss.

I asked how Telecom managed to sustain an 018 service.

Mr Cotterill replied that it was run at a loss.

So it’s a loss-maker for Yellow as well? Mr Cotterill initially said yes, but was corrected by his CFO who said the number service makes a slight profit.

Mr Cotterill regularly calls 018 himself, and says the experience for both him and the public at large is getting better.

“Now there are good user experiences and there are bad ones. What we had earlier on was a lot of bad experiences.”

He relates how he often calls 018 when on the motorway. Recently, he saw an ENZed van, and called the directly, expecting that the Manila operator would muff the NZ/EnZed distinction, but was pleasantly surprised when they didn’t.

NBR's own tests have found improvement in the service when ten Kiwi names were thrown at it on ten occassions (in our print edition). But I tell Mr Cotterill that, personally, I still dread calling the service.

Yellow had hoped that training and other measures put in place to improve service would have yielded better results by this point, Mr Cotterill admits.

“We’ve made progress on the quality of the service but it’s still not there. Responsiveness is improving but not as fast as we’d like. It’s still not operating at the level we’d anticipated.”

When will it?

“We thought it would be by now, to be honest,” said Mr Cotterill. “We’ve continue to throw resource, as does Teletech [Yellow’s call centre partner].”

When will the service get to where Yellow wants it to be? The company is just taking it month-by-month, said Mr Cotterill.

Unlike Telstra, which pulled a small business calling service back to Australia, the Yellow chief executive is committed to staying in Manila.

But there are limits.

Mr Cotterill said Yellow has no plans to offshore any other work.