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Trustpower winning new customers with multi-service product bundles

Monday 21st January 2019

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Trustpower says more than 80 percent of the new customers it took on in the December quarter signed up for two or more products.

The company had about 400,000 utility accounts at Dec. 31, up from 399,000 at the end of September and 395,000 a year earlier.

But all the growth in the quarter was in the firm’s telecommunications services. Gas accounts were unchanged at 38,000 while power connections fell to 269,000 from 270,000 in September and 273,000 last December.

Trustpower, the country’s fifth-largest power retailer, has offered phone and internet services since 2007 and began offering gas in 2013 as part of a strategy to target more valuable customers and discourage them from changing supplier. Churn rates among customers taking power, gas and internet are almost half those of customers taking electricity only.

In the quarter, 82 percent of new customers took two or more services, up from 78 percent in the September quarter and 80 percent a year earlier.

About 105,000 Trustpower customers take two or more services from the company, 7.3 percent more than a year earlier.

Trustpower has focused more on telecommunications in the past year, given the tough competition in the gas market and what it considered to be unsustainable prices being offered in the power market.

But it is not alone. Contact Energy has also begun offering broadband and Todd Corp-owned Nova Energy is offering phone and internet services.

In November, Trustpower signed a wholesale deal with Spark New Zealand to enable it to start offering mobile phone services and wireless broadband.

Those offers are yet to be launched so don’t feature in the latest data.

Chief financial officer Kevin Palmer said the firm is still working on its back-office systems and the interface with Spark for the offers planned for 2019.

Mobile and wireless broadband are “pretty strategically obvious” candidates for the firm’s existing electricity and broadband bundle. While he didn’t give a date for their launch, Palmer said wireless broadband is more analogous to the existing service and will be launched first.

Trustpower shares rose 5 cents to $6.24. They are up almost 5 percent the past year.

In October, the company raised its full-year earnings guidance citing good trading to-date and high wholesale prices caused by low hydro storage and tight gas supplies.

Today, the company reiterated that it expects to report earnings before interest, tax, depreciation, amortisation and changes in financial instruments of between $215 million and $235 million for the year ended March.

While the firm’s power sales fell to 881 gigawatt-hours in the quarter, about 2 percent less than a year earlier, the firm’s generation was marginally higher at 490 Gigawatt hours and its average spot generation price was more than two-times higher at $200 per megawatt hour.

For the nine months, power sales were 2,917/GWh, 2 percent less than this time last year. Generation volumes were 8.5 percent lower at 1,656/GWh but average prices were 31 percent higher at $117/MWh.


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