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2degrees delivers maiden $13.4m profit

NZN 17/05/2017 Pattrick Smellie

Challenger telecommunications provider Two Degrees Mobile has produced its first net profit since launching in the New Zealand market in August 2009.

It also raised its operating earnings by 43 per cent for the second year in a row.

Accounts lodged with the Companies Office on Wednesday show 2degrees posted a pre-tax profit of $9.4 million in the year to December 31, to which it was able to add a tax credit of $4m to produce net profit of $13.4m, compared with a loss of $33.1m in 2015.

On an earnings before interest, tax, depreciation and amortisation basis, earnings rose 43 per cent to $113.3m from $79.3m in 2015.

The company was "very proud" to achieve ebitda growth above 40 per cent two years in a row, 2degrees chief executive Stewart Sherriff told BusinessDesk.

"I don't think you can find another company, certainly not in New Zealand, with service revenue of over $700m that managed to increase ebitda 43 per cent year-on-year."

Since establishment, 2degrees had clocked up total accumulated losses of $396.8m to the end of 2015 as it invested heavily in a national mobile network that now covers 97.5 per cent of the country.

It also moved into fixed line telephony and broadband services to allow it to compete across the full range of telecommunications services, barring entertainment content.

Mr Sherriff said that while two to three years ago, he would have said "content is king" for a telco, the company's experimental offering of Sky Network Television's Neon service had "not really worked".

The result was achieved on a 23 per cent increase in total revenue to $702.7m.

The company showed 19 per cent growth in postpaid subscriptions, adding a net 59,600 customers during the year for a total of 372,300.

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