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AAPT targets Telstra's mainstream business

Nick Stride

Friday 14th November 2003

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Telecom unit AAPT has gone on to the front foot in Australia, using its own experiences as an incumbent to mount a guerrilla marketing campaign against Telstra.

With the operation now cashflow positive, AAPT has shifted its focus from high-end corporate customers to high-use retail and business accounts and it has stepped up its advertising and marketing campaigns.

Its television advertising is fronted by Greeks on the Roof star Effie Stephanides spouting lines such as "hairs [sic] should be high, not phone bills."

The idea, Telecom chief executive Theresa Gattung said, was to recapture AAPT's former image as an irreverent attacker offering value for money. One new product is line rental saver (LRS), offering low or no-access fees to high-use voice customers.

"That's hard for Telstra to match as it has a big access revenue stream," Gattung said.

The new strategy fitted with AAPT's network, which had switched voice and data capability but not much "last-mile" infrastructure. The change has been rolled out over the course of this year but has yet to have much effect on profitability.

For the September quarter ebitda (earnings before interest, tax, depreciation and amortisation) from Australia were $28 million, down from $33 million in the same quarter last year.

The slight fall reflected the effects of the higher New Zealand dollar, increased advertising costs and higher bad debt expenses. Consumer ebitda fell from $13 million to $4 million while business ebitda rose from $20 million to $24 million.

AAPT has been targeting customers who take bundled services and shedding low-value accounts, lifting average revenue a fixed-line customer.

Switching hats back to incumbent, Gattung took strong issue with the approach taken by telecommunications commissioner Douglas Webb in his review of regulation in the local market.

Webb has come under attack not just from Telecom but from business groups and players such as BCL and Woosh Wireless.

"Every company here is investing and every technology worldwide is deployed or is about to be deployed," Gattung said. "So what problem is being addressed?"

Woosh chief executive Bob Smith said unbundling hadn't worked in the US and had driven many companies that had since gone broke to invest huge amounts of money.

"Our concern is that there isn't market failure now. The regulator, by unbundling, is choosing a technology, DSL, and deregulating the local loop in a way that he can end up setting artificial prices that drive a higher risk scenario for the likes of us who are building alternative infrastructure."

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