Telecom New Zealand and politics

Telecom 'got political angle wrong'

Telecom chief executive Paul Reynolds concedes that the company has previously failed to build an adequate relationship with the government.

Telecom boss sees earnings growth in 2011

At a highly anticipated investor briefing today in Sydney, Reynolds offered up his strategic vision for the transformation of the company.

He admits shareholders have had a rough ride in the past two years, and Telecom must avoid the "regulatory shock" of the past by meeting stakeholder expectations.

The firm got the "political angle" wrong, he says.

It has begun a programme of work with politicians including considering private-public partnerships with local government to build broadband connections.

Reynolds says there is a "hell of a lot of stuff to address" to reduce significant operational expenditure in the company.

"It's clear there are many areas we can focus on to get reductions in our expense line."

It's targeting a $300 million per annum decrease in operational spend.

To do this, Reynolds says high customer service targets will comprise a third of all incentives for managers.

It plans major savings through developing sales and services online, with the long-term aim for 60 per cent of customers to be online.

The firm plans to push its policy of outsourcing its call centres, while still delivering on customer service targets.

Reynolds says "significant savings" will be made in the shift from the traditional PSTN telephone and internet model to the next generation network.

The firm has set some ambitious targets of improving customer satisfaction by growing broadband connections.

It aims to have a 60 per cent stake in broadband connections, including one million home served customers.

The company is targeting 26 per cent to 40 per cent net broadband additions in the next four months, and 55 per cent net additions.

Reynolds realises that the firm needs to get out of its "mobile cul de sac".

The company is in the process of shifting from its CDMA technology, which has limited ability to roam overseas, to a world mode roaming solution, called W-CDMA.

Telecom aims for the majority of its share of the post pay mobile phone market to grow 25 per cent, and for the company to lift its share of the mobile market above 50 per cent.

Telecom's IT division, Gen-I, holds a 12 per cent share of the New Zealand market, and Reynolds is targeting a 10 per cent margin return on ICT growth.

Investors appeared to show little surprise in Reynolds speech. Telecom's share price fell 4 cents to $3.76.