One NZ reports gains as it writes off $64.1M of systems investment

One NZ reports gains as it writes off $64.1M of systems investment

Telco reported EBITDAF up 9.7 per cent from 2022 excluding one-offs such as its TowerCo sale.

One NZ's rebranded St Lukes store in Auckland

One NZ's rebranded St Lukes store in Auckland

Credit: Supplied

Telco One NZ has reported an earnings lift for the year to 31 March 2023 even when discounting a $444 million one-off gain from its sale of tower assets.

While there were one-off gains, there were also one-off losses.  

The Infratil-owned telco wrote off $64.1 million of work in progress on a transformation programme called 'Digital Accelerator' during the year, made a provision for $4 million more and impaired $9.1 million of unspecified software.

A 2021 job ad relating to Digital Accelerator said the then Vodafone NZ was "on a mission to re-imagine our industry, to enable NZ to connect effortlessly to things that matter, with a brand they trust, a service experience they find engaging and a value proposition that’s simple and great value."

The write-offs related to a change in strategy announced at One NZ owner Infratil’s October 2022 investor day in Sydney. 

A note in an Infratil investor day presentation said a business support systems modernisation programme being delivered by an unnamed international vendor was proving challenging and One NZ had "pivoted" back to work with its existing vendors. 

"We took the decision to switch from building an entirely new IT system for the business to a series of upgrades of our existing systems instead," One NZ spokesperson Matt Flood told Reseller News

One NZ had assessed the work completed and reused what it could, he said.

According to a note on Polish firm Comarch's website, it won a $122 million, ten-year contract to deliver software and maintenance services to Vodafone NZ in August 2020. 

That relationship has ended, Flood confirmed. Comarch has been asked for comment.

One NZ's accounts show it earned total income of $1.98 billion, up slightly from $1.97 billion in 2022. However a $444 million gain on the telco's $1.7 billion tower sale boosted operating profit to $489.4 million from $85.1 million.

After tax profit of $558.4 million was, on the same basis, even further improved, up from $26.9 million in 2022.

However, excluding the one-offs relating to the TowerCo gains and the impairments, including Digital Accelerator, One NZ still reported improved earnings before interest, tax, depreciation, amortisation and fair value adjustments (EBITDAF) of 9.7 per cent to its shareholder, ahead of guidance.

The telco has been getting its IT shop in order on several fronts to boost the customer experience, stabilise its IT systems, increase network utilisation, improve capability and remove costs. 

That investment included a forced SAP-based ERP implementation, successfully completed after just eight months in the middle of last year.

A second phase of transformation was to see One NZ building on those gains to maximise the value of its infrastructure assets while using its improved capability to increase revenue, the telco's NZX-listed owner, Infratil, told shareholders in February 2022. 

In July, 2018, Vodafone selected IBM and its AI platform Watson for an agile-based digital transformation.

The telco said the vision for that programme, called 'Digital Vodafone 2021' was to create the "most engaging digital customer experience" by adopting agile as a way of working, embracing new technologies and simplifying business models.

The programme was supported by IBM iX, one of the world’s largest digital agencies and business design partners. 

In early 2022, One NZ extended its collaboration with IBM, and its partner Matrixx Software, to provide enterprise-wide monetisation for all post-pay, pre-pay, wholesale and IoT customers and to deliver a transformed digital experience. 

Steve O’Donnell, IBM NZ consulting managing partner, said at the time that to realise the promise of 5G over the next few years, decisions had to be made about the right technology solutions, skills and support needed to succeed.  

California-based Matrixx was selected to enable the consolidation of multiple charging solutions onto a single instance, with sub-domains for each business unit to optimise costs and gain operational efficiencies.

Flood told Reseller News One NZ had delivered a number of successful technology projects including migrating all consumer and SME customers off legacy IT stacks onto new target platforms, separating from Vodafone for ERP, office IT and security, standing up a new contact centre, building cloud infrastructure, delivering network as a service and APIs, modernising ticketing and customer reporting and more.

"We are on track to deliver increased AI and analytics to drive new user experiences, automated security tools, controls and compliance to ensure effortless customer migration to new products, plans and IT stack," he said.

Further "radical product simplification", digitisation and automation across all products and journeys were also in train.

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Tags SAPsystemsTelecommunicationsvodafone NZbillinginfratil5GDefendMATRIXX SoftwareOne NZComarch



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