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Oonagh Reidy

Vodafone Profit Up Despite Network Scandal

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VHA out of the red as earnings rise 171.6% as mobile base grows.

Profit for 2010 also leapt out of loss making territory, turning to positive growth of $73.4 million.

This a major change from this time last year when Australia’s third biggest Telco posted a loss of $119.6 million.

The strong results were “based on strong growth in postpaid customers and service revenue” said Hutchinson Telecoms Australia (HTA) on Friday. 

This compensated for heavy losses experienced in their broadband subscriber growth figures, which slumped to 142,000 new additions in the second half of 2010 compared with 539,000 for H1.

Earnings as a percentage of service revenue has risen 12.3 percentage points to 21.6%.

Late last year VHA was besieged by continuous issues with their network which affected mobile services, including call failures, slow data speeds and poor reception. 

Vodafone recently apologised to customers for the service disruptions and said they added staff into the customer care division and in coming months users will be able to contact Vodafone at any time they wish.

However, despite the strife, their customer base grew “strongly” in 2010 with 681,000 new customers joining the network – a jump of an increase of 9.9% from this time last year.

VHA now has a total customer base of 7.58 million customers.  

 

Its postpaid customer growth grew 11.5% (excluding wholesale customers).

And more than 3 million customers are using mobile 3G broadband via devices like USBs and pocket WiFi.

 “2010 was a good year with solid profitable growth underpinned by strong postpaid handset performance,” said Vodafone Hutchison Australia Chief Nigel Dews. 

VHA is expected to remain profitable in 2011 and is on track to achieve merger synergies with a net present value of $2 billion, says HTA. 

Recently Vodafone announced improved service network with new upgrades in the form of their new 850MHz network, including a new quad band mobile broadband modem launched last week.

HTA’s share of VHA’s pre tax earnings improved 171.6% to $475.8 million, driven by margin growth and reduction in operating costs since mergering, they said. 

 

“We are pleased with VHA’s performance, profitability and continued growth in service revenues in the first full year since the merger” according to Chairman of HT Canning Fok.  

VHA is a 50:50 joint venture between Hutchison Telecoms and Vodafone Group.

Online A Winner At Dick Smith..But Where Is Harvey?

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In an ever competitive retail environment, big retailers are looking Online to boost sales as e-commerce booms. But where is Harvey Norman?


Click to enlarge

Dick Smith saw a sales jump of 6.5 percent in the second half of 2010 on the back of “strong customer trading” with a revamp of both their online and in-stores offering carried out in the last year.

Its refreshed website, which now offers full product ranges for purchase resulted in “strong customer engagement and significant growth,” said Woolworths, owners of both Dick Smith and Big W chain today, describing the customer response as “very pleasing.” 

The total sales for consumer electronics in the Australian region at $726m – compared to $710m for the previous half – equating to a rise of 2.3 per cent. 

Read full Dick Smith story here

And online is growing fast. By 2015 it is forecast to account for 22 percent of all purchases made.

Big W currently offers 9,000 products for online purchase and almost all products on sale in-store can similarly be purchased online at Dick Smith who “continue to gain significant momentum in this channel”.   

The electronics giant’s willingness to change with the times and enormous efforts towards overhauling their service offering, “transitioning to a modern computer electronics business,” has been their great strength in light of fierce competition and heavy price discounting from rivals. 

However, one can’t help but wonder if it is Harvey’s Norman’s major weakness.  

Read Harvey Norman profit story here

Woolies has also revamped its flagship store website as well as that of Big W in May and also plans to unleash its top bottle shop Dan Murphy to the web early next year.  

 

It was clear from their statement today that their efforts have been paying dividends although gross margin fell by 1.15 per cent – from 27.50 percent to 26.35. Net profit after tax for the group rose 6 per cent.

Online sales for the group as a whole rose a whopping 75 percent. 

“Shopping online has become an increasingly important part of the Woolworths business with strategies developing across all trading divisions,” admitted the retailer as it launching its BigW.com in May last year, which they said was performing well. 

In a similar vein, the other major player in the electronic market, JB Hi-Fi reported reported an 8.3% jump in sales and a 16% jump in profits for the last quarter to December 2010, in spite of difficult trading conditions. Online sales grew 35% in the period and the retail giant has continued to expand its online presence.

“Our online sales grew 35% over the half year and were up 49% in December. Whilst a small but growing percentage of JB total sales, the online business is an important part of our overall strategy”.

Despite all the furore late last year and early this year made by Chairman Gerry Harvey over online companies eating into his market share,  there was no mention of online going forward or no reassurances about online growth in the statement released today.

 

He referred only to his stores, saying: 

“The primary focus remains in the enhancement of our customer offer while expanding and upgrading our retail complexes.”

This either means there is elephant standing in the corner of management’s office or else expect a major harveynorman.com offensive soon.

David Jones Sales Cool As Tougher Trading Hits

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Intense competition, bad weather and flooding makes for lower footfall across the retailer’s stores.

Retailing giant David Jones has released sales figures for Q2 covering October to January last, revealing a drop in sales and a relatively flat outlook for future growth. 

Sales revenue of $617.6 million was recorded for Q2 2011 – a fall of 2.7 percent compared to the previous year’s figures for the same period, although this falls to 1.1 percent when the calendar is adjusted.           

Sales for the Q1 of this financial year were $466.6m – a rise of 3.2 percent on the previous year. 

No breakdown in the sales figures were given, although its electrical appliances division was also likely to be a casualty of falling figures considering the increasing use of online stores among consumers.

The company described consumer spending as “patchy”, citing heavy pre-Christmas discounting by retailers leading to “a very competitive retail environment, ” as well as the losses incurred by the Queensland floods among the mitigating factors. 

However, guidance profit after tax for the first half of this year (H1) is still predicted to rise 5 percent and likewise predictions for H2 set for between 5-10 percent, but are now likely to “be at the lower end of this range,” DJ said in a statement.  

However, the outlook remains somewhat gloomy at the retail giant, predicting future growth in sales this year to be flat. 

“We experienced a challenging second quarter with wetter and cooler weather,  decline in customer sentiment and significant discounting in the lead up to Christmas and the impact of the Queensland floods on six of our stores,” according to DJ CEO David Zahra. 

 

“Consumer shopping behaviour continued to be patchy throughout 2Q11 and we have seen no material signs that this is changing.”  

“Despite in 2Q11 with heavy promotional activity by retailers,we have managed our cost position well and I am pleased to report that we have also effectively managed our Gross Profit Margin and Inventory,”  he said.

Expansion of its Perth Claremont Quarter with 85 percent more selling space, its Bourke Street Mall outlet in Melbourne CBD  and the new Westfield Sydney centre were all cited as strong performers.  

Foxtel Eyes Up Pay-TV Austar For Takeover Bid?

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Rumour has it a takeover could be on the cards. Foxtel shareholders which includes Telstra, Consolidated Media and Rupert Murdoch’s News Ltd are said to be mulling over a possible deal and may be “getting closer to agreeing on a potential bid price,” according to the Australian, owned by News Ltd.
This is not the first time a takeover deal has been played out for the regional pay TV outfit, however.

Both News Ltd and Consolidated attempted to get deals up in 2005 and 2007 which was subsequently rejected by 50 per cent shareholder Telstra.

Austar CEO, John Porter has gone on record as voicing his support for the deal, declaring there was “so much compelling industrial logic” to a merger deal with Foxtel.

However, he insisted his company “has not received any offer” to date. 

However, Porter has just jumped on a plane bound for the US accompanied by Foxtel CEO Kim Williams, which indicates talks with Austar’s main shareholder Liberty Global, which owns 55, percent are underway.  

Austar, which also has a mobile and broadband division, has 760,000 subscribers and is the largest pay television operator in regional Australia.

 

Established in 1995, its service includes over 180 channels, 13 HD Channels, a near video-on-demand service, as well as box office movies, Sports Active and SKY News Active.

Nine Sells Carsales.com Stake To Mystery Buyer

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Nine Entertainment’s equity owner CVC Asia Pacific sells its stake in online car seller.Nine subsidiary, ACP Magazines have just announced the sale of 49.1 per cent share in the car dealer by equity owner CVC, to a “broad range of sophisticated and institutional investors at $4.92 a share”, ACP Director Patrick O’Sullivan it said this morning in a statement. 

The deal said to be worth $565 million could affect the timing of Nine’s $5bn IPO.

Strong results from the online car dealer coupled with solid price performance were the driving factors in the sale, according to reports. 

Shares in the company have spiked more than 50 per cent since 2009.  

Nine chief David Gyngell and CVC’s Adrian MacKenzie as well as Graham Brooke have resigned from the board.   

The sale was carried out by UBS AG, Australia. 

CONFIRMED: Murdoch To Takeover Sky As UK Media Cries Monopoly

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Media mogul Rupert Murdoch has been given the go ahead to take over BSkyB by the UK government.

However, there has been an outcry of protests from British MPs who are outraged his News Corp, who already has a stranglehold of British media interests, will now control one of the biggest broadcasters in the country.

British culture secretary, Jeremy Hunt MP, who announced the decision yesterday, said the deal included safeguards ensuring editorial independence, which would limit the monopoly type effect many fear the buyout will bring, with Murdoch undertaking to establish Sky as an independent entity.  

The decision to allows News Corp who already owns 39.1 per cent, purchase the remaining 60.9 per cent stake in the satallite broadcaster, will be followed by a period of consultation. 

“I am consulting on proposed undertakings from News Corporation. Informed by advice from the regulators, I believe that these will address concerns about media plurality should the proposed News Corporation/BSkyB merger go ahead,” said Hunt. 

Communications watchdog Ofcom pointed to the problems with media
plurality a buyout would bring, in a report published last year. 
However, the body gave their seal of approval to the deal following the
undertaking by News. 

“The process has been completely fair, completely impartial and completely above board,” he insisted. 

The deal, said to be worth $14bn is the largest in News Corp history, and will also require approval from BSkyB shareholders who are seeking a higher bid than the GBP 700 pence per share offer currently on the table. 

Opposition MPs, who are vociferous opponents to the takeover plan and
their contempt for Australian born Murdoch, have called on Hunt to refer
the case to the Competition Authority because “nobody believes these undertakings agreed to by Murdoch will be adhered to in the long term”.

The decision marked a “disastrous day for democracy,” declared another fellow Labour MP.

A fully owned News Corp owned BSkyB, (the giant currently owns 39.1 per cent) will be renamed Newsco and governed by an impartial board of directors, chairman and editorial committee who have no vested interests in the media powerhouse . 

News Corp, who already owns The Times, The Sun, and the Wall Street Journal as well as holding various interests in Australian print and broadcast media including a 25 per cent stake in pay TV broadcaster Foxtel, means the decision may have implications here also. 

BSkyB is also shareholder with the Seven Network and Nine Entertainment Company in Sky News Australia, one of Foxtel’s anchor stations. News Corp has pledged to forfeit ownership of its flagship news channel as part of the takeover deal.

This week it also emerged Foxtel is in talks with regional pay TV player Austar, in what is rumoured to be a $2bn deal.

And this decision from the UK has not been without controversy.

Last year UK Business Secretary, Vince Cable, who rejected the idea of a News Corp takeover of Sky, after declaring “war”on the Murdoch empire, was quickly ejected from responsibility for the decision by Prime Minister David Cameron, with the Culture Secretary given the job. 

British media are also furious at the decision by the Conservative MP,
with a media alliance made up of other major players there including BT,
Guardian Media Group, Associated Newspapers, Trinity Mirror,
Northcliffe Media declaring:

 

 “We deeply regret the fact that the Secretary of State is minded to
clear the deal. The proposed undertaking is pure window-dressing … We
shall be vigorously contesting this whitewash of a proposal during the
consultation period, as well examining all legal options.”

Hunt was said to be a supporter of News Corp takeover as is his ruling Conservative party. 

Telstra: From Service Nightmare To Personal Shoppers

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They used to be lambasted for their consumer service, or lack of it. But now Telstra have turned to personal shoppers, pledging to give consumers their “undivided service” when they come through their doors.Telstra is offering the “exciting” new personalised service for its Launceston store, where customers can “book an appointment online ahead of time and get personal, undivided service when they arrive in store”.

This is part of the telco’s $1 billion makeover plan, Telstra New, its bid to win back customer support for its often loathed service.
 
Initial customer feedback has been very positive, they said in a statement today.

Personal shopping will enhance the customer’s shopping experience, says Telstra Manager for Northern Tasmania, Michael Patterson. 

“Personal Shopping is a great in-store premium service we’re trialling. It’s designed to allow us to differentiate ourselves and provide better experiences for our customers,” Mr Patterson said.

It will also provide customers with a more targeted, streamlined and convenient shopping experience, say the telco. 

“There are also customers who prefer to talk to their partner or have a think about a purchase, so booking a personal shopping appointment means they can return to the store later and pick up right where they left off,” Mr Patterson said.

 

 “One of the advantages of personal shopping appointments is it gives stores the ability to manage traffic without damaging the customer experience,” he said.             

The Telstra Shop in Launceston is located at Shop 3, 136-142 Brisbane St.

Google Offer Free Sites To OZ Biz

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Internet powerhousemake a bid for Aussie businesses through new scheme.
‘Getting Aussie Business Online’ is a collaboration between the giant and software company MYOB, offering companies a free website and Australian domain for 2 years and other perks such as $75 for Google’s Ad words advertising service.

It also offers advice and education for small operators seeking to gain online presence and are aiming to get 50,000 businesses online in the first year alone.

The service will help with building pages with the help of a MYOB site map.

“A website today is like a phone – every business needs one. If you don’t have one, now is the perfect time to Web Up,” the promo says.

“We’re taking the time, hassle and cost out of getting a website so that you can get on with running your business.”

The move will pose as a threat to domain hosting companies like Melbourne IT and Net Registry, given that it is offering services free of charge, initially. After two years a $30 fee will apply for services.

Tim Reed, CEO of MYOB, said, “Our initial goal is to get at least 50,000 businesses set up with a free website this year. We’re thrilled to be collaborating with Google on this initiative.”

The new online venture follows a similar project in the UK last year.

NBN Row Rages On As Telstra Rejects Connections

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121 NBN connection points confirmed as new row breaks out.The Competition and Consumer Commission (ACCC) which released its revised list of 121 points of interconnect (POI) to the broadband network yesterday said the number was crucial for ensuring adequate competition was in place. 

This was following original proposals by the NBN Co for just 14 points of connection where telco’s could hook up to the NBN’s fibre network. 

The ACCC rejected this and recommended an increase in the number of connection points, claiming the current number would reduce competition in backhaul markets.

However, Telstra, which it was revealed recently made a submission to a parliamentary enquiry over several aspects of the NBN’s supply arrangement, has also come out criticising the number of POI’s as “insufficient”. 

“It is an insufficient number of POIs to meet the long-term interest of end-users and other obligations and will lead to some level of investment stranding,” Telstra said in its submission. 

The country’s biggest telco player also claims the revamped locations are too heavily focused on metropolitan markets, meaning other areas will lose out. 

Carriers like Optus, VHA and TPG also back a ‘low consolidation’ approach, calling for the establishment of up to 400 or 500 points of connection to the fibre network.  

 

Internode’s MD, Simon Hackett also supported the original 14 POI, claiming a larger number would mean “all smaller players will be forced to buy access from their own (generally) capital city based networks, through to each of those 200 POIs, from one of the few players with that existing fibre backbone structure in place.” 

However, the ACCC say otherwise, claiming “the availability of competing fibre infrastructure was a key element of the competition criteria,” Chairman Graeme Samuel said in a statement yesterday. 

The new list followed a public confirmation process into the 120 initial POI developed by NBN Co in consultation with the ACCC.

Australia’s largest telco also fears the NBN Co will usurp its business interest by entering the supply market, dealing with profitable clients including Woolworths, mining companies and state agencies – all lucrative business Telstra wants for itself.
 
According to a report in The Australian this morning, Independent MP Rob Oakeshott, a strong supporter of the $36bn project, will chair a joint parliamentary committee looking into the NBN rollout.

 

Members from Labour and the Coalition will also sit on the enquiry.

Myer Chase Bargain Lovers From China

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They go by the slogan “my store” but now Myer has decided to go after bargain bin lovers with a new site.

The myfind.com website, operating out of China, which went live on 28 February, is seeking to offer “great value and one-off special buys for online shoppers,” a position that the retailer previously felt was denied to them by the government’s refusal to levy GST on goods sold by competing online rivals under $1000. 

The store, which was never affiliated with heavily discounted goods, appears to be performing a U-turn in its sales strategy, facilitated by the online revolution.

Canberra’s refusal to budge on the issue led them to set up shop out of China. 

“If we can’t beat them we will join them,” lamented Mr Bernie Brookes, Myer’s CEO last year.

“We just want a level playing field. We will take jobs offshore and we will ship product out of China through our internet site, it’s a bloody shame.”

At the moment, there are only two laptop devices on offer, an Acer Aspire 5742 as well as an eMachine, eME732Z , but say they are testing the waters before the discounting site is unleashed fully to consumers. 

It is thus a safe bet to expect more discount devices will bolster its online offering in the coming weeks. The new site is a value-focused online business that is quite different to its existing department store offering, says the retailer.  

The eMachine model is priced very competitively at $498 – over $100 cheaper than other online IT retailers including Techbuy.com or iTech.  

 

The Acer 5742, priced at $697, matches, and in a few cases undercuts rivals, when compared on getprice.com.au, and could see the beginning of the high street retailer carving itself a bigger slice of the Oz electronics market if it maintains this huge price assault.

Indeed, the high street seller says the site will be a testing ground for selling new “low cost ” products and allows it to operate at a far lower cost out of China.  

“Myfind.com presents Myer with the opportunity to test new merchandise and the potential for product and range extensions of our existing department store offering at a lower cost of doing business and working capital investment,” Jo Lynch, Myer’s Corporate Affairs, General Manager told Smarthouse.

“This is an exciting new business for Myer targeting a different, growing consumer segment,” she added.

Over coming weeks the myfind.com site will be fine-tuned before a formal launch supported by marketing activity to drive traffic to the site.

 

Myfind.com is run from offices in both Hong Kong and China. 

The new site is offering delivery for just $10 and is facilitated within 3-5 days via its relationship with China Post in conjunction with Australia Post.