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2degrees exceeds guidance, reestablishes momentum

2degrees exceeds guidance, reestablishes momentum

Trilogy International reports on its progress in New Zealand with 2degrees

2degrees outgoing CEO Stewart Sherriff

2degrees outgoing CEO Stewart Sherriff

The owner of 2degrees highlighted the New Zealand mobile challenger's performance when reporting its full year 2018 results yesterday.

Brad Horwitz, president and CEO of Trilogy International, said the New Zealand business began the year aiming to regain momentum in postpaid sales and normalising operating expenses.

"We are encouraged by our progress on both fronts," he said. "As a result, we exceeded our original guidance on the adjusted EBITDA line. Our strategy is working and we expect this strong growth to continue into 2019."

New Zealand adjusted EBITDA for the fourth quarter increased 24 per cent year over year, despite a foreign exchange impact of four per cent, driven by reducing churn and normalising operating expenses.

Excluding the adverse impact of the New Zealand dollar as compared to the US dollar, Trilogy said New Zealand adjusted EBITDA for the year increased nine per cent.

Sales rose seven per cent to US$556.4 million, while the loss from continuing operations increased by six per cent, or US$1.7 million.

Trilogy reported strong growth in New Zealand wireless postpaid subscribers, up by 34,000 or nine per cent from 31 December 2017. New Zealand "wireline" (broadband) subscribers increased by 13,000 or 19 per cent.

New Zealand broadband and mobile postpaid service revenues grew 11 per cent and five per cent, respectively, during the year, contributing to a one per cent increase in New Zealand service revenues compared to the same period in 2017.

However, 2degrees New Zealand’s wireless subscriber base decreased two per cent compared to 31 December 2017, mainly driven by a decline in prepaid subscribers, which declined six per cent in the period.

"This decline was primarily due to 2degrees’ shutdown of its 2G services in the first quarter of 2018, which deactivated 37 thousand low-value 2G subscribers," the company said.

The acquisition of Snap has given 2degrees the ability to develop SME specific plans and to cross-sell services to existing mobile and broadband subscribers, the company reported.

"These initiatives are expected to drive meaningful increases in service revenues, adjusted EBITDA and, importantly, cash flow, given that fixed-broadband offerings in New Zealand require minimal capital investment because of the fibre-to-the-premise infrastructure funded and supported by the government," the company said.


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