Wednesday 4th September 2019
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Vodafone New Zealand will spend twice as much on restructuring in the current financial year as its new owners accelerate plans to strip out costs.
The country's biggest mobile carrier spent $10 million as part of an organisational restructuring that included disestablishing jobs in New Zealand in the year ended March 31. It expects to spend another $20.8 million in the current year, its financial statements show.
That restructuring bill helped push up Vodafone's labour costs to $278.3 million in the March year, from $263.9 million the year before, but it's not commenting on the savings achieved or future savings expected.
Infratil noted the cost transformation programme as generating significant savings and delivering results when it announced its acquisition of Vodafone in May.
The company filed its last accounts to the Companies Office under Vodafone Plc ownership. Infratil and Brookfield Asset Management completed the $3.4 billion purchase on July 31.
The accounts show Vodafone reported a profit attributable to shareholders of $21.3 million in the March year, down from $40.4 million the year before. Revenue dipped 3.4 percent to $1.96 billion, of which service revenue was down 7.9 percent at $1.63 billion. Revenue from devices climbed 26 percent to $296 million.
A Vodafone spokesman said half the $139.1 million decline in service revenue was due to changes in the way new accounting standards treat revenue.
"Increased competition in both broadband and prepay have been a challenge to our customer base," he said. Phasing out legacy fixed-line products such as multiple phone lines, answering services and mail hosting added to the pressure on average revenue per user and pushed down annual revenue.
Earnings before interest, tax, depreciation and amortisation fell to $361.3 million from $403 million.
The company affirmed to BusinessDesk guidance for revenue of $2-2.1 billion in the March 2020 year and underlying earnings - adjusted for separation and transaction costs - of $460-490 million.
Vodafone's group accounts show the New Zealand carrier had 2.55 million mobile customers as at March 31, down from 2.56 million a year earlier. Since then, that's dipped to 2.54 million. However, over that time, its proportion of contract customers increased to 44.5 percent at June 30, from 43.5 percent in March and 41.3 percent in March 2018.
Broadband customer numbers have also been shrinking, falling to 424,000 as at March 31 from 426,000 a year earlier. Since then, Vodafone's broadband customers have dropped to 418,000.
Vodafone this week announced plans to link up with Kogan Mobile to offer budget mobile prepay plans to rival those of Two Degrees Mobile and Spark New Zealand's Skinny brand.
Infratil has indicated it wants Vodafone free to pursue a New Zealand-centric strategy, but doesn't need new income streams to hit its business case. Vodafone is keen to pursue a fixed wireless broadband strategy, much like Spark has, in a bid to reduce its wholesale costs to access networks owned by third parties. 5G mobile is seen as another way to achieve even bigger savings.
Vodafone's interconnect and access costs already shrank 4.7 percent in the March year to $369.8 million.
Device costs fell to $341.9 million from $366.4 million, as increased uptake of interest-free offers for handsets meant the telco was providing smaller subsidies.
That also underpinned an increase in trade receivables to $253.3 million from $181.7 million a year earlier. In the March 2018 year, Vodafone also sold $36.5 million of trade receivables to a related party.
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