2degreess turns in first profit

2degrees has reported its first profit, for the year ending December 31 2016, saying it doubled the size of its fixed broadband subscriber base during the year, albeit from a small base: it was only the first full year for the service.

The company reported revenues of $702.7m and a $13.4m profit compared to a $33.1m loss the previous year. Revenue was up 23 percent on the prior year, and EBITDA up 43 percent. The company increased postpaid mobile customers by 19 percent.

2degrees CEO Stewart Sherriff said network costs had reduced because the company had completed a mobile network extension programme, taking coverage to 97.5 percent of the population.

He added that the company’s telecommunications as a service (TaaS) offering had attracted large government organisations such as the Ministry for Primary Industries.

2degrees says it is now looking at opportunities in rural New Zealand as part of the Rural Connectivity Group set up to deliver the government’s Rural Broadband Initiative Extension (RBI2) network, which would see it invest in shared infrastructure with competitors while continuing to compete with them at the retail level.

In April Vodafone, Spark and 2degrees made a submission to the Government proposing to use the recently announced RBI2 and the Mobile Black Spot Fund to improve rural broadband and mobile infrastructure.

They said they would invest hundreds of millions of dollars including a capital contribution of $75m to establish the infrastructure and contribute spectrum, ongoing operating expenditure and other resources that would more than match the Government's own contribution of $150m, via the Telecommunications Development Levy (TDL).

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