Telstraclear loses tax credit

By NZPA

Monday 22nd January 2007

Telecom competitor TelstraClear had to forfeit $180 million of tax credits because of the Australian government's sale of shares in parent Telstra last year.

Companies gain tax credits when they make losses but they lose them if there is a substantial change in ownership.

Since it was incorporated in 1989 TelstraClear has racked up losses of $726 million in New Zealand, The Dominion Post newspaper reported.

The company reported a $19.1 million profit in the year to June, down from $25.2 million last year, the newspaper reported, citing a filing with the Companies Office.

TelstraClear still has tax losses of $57 million.

TelstraClear was in the spotlight just before Christmas when an e-mail from chief executive Allan Freeth, designed to rev up staff, leaked.

Freeth said in the e-mail that the company was on a trajectory to disaster.

The e-mail said the company was facing a loss of $7 million this year, rather than a profit of $14.8 million expected by its Australian parent.

"We are being out-marketed, out-smarted and out-gunned in the market place. We are too slow in reacting and we lack the killer instinct."

He told staff "we are too tame, too lame, and too timid to call ourselves a challenger".

TelstraClear competes with Telecom, which faced new regulations last year to encourage competition.

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