Operating revenues were $292 million, a decrease of 1.7 percent. EBITDA was $5 million down 79.2 percent and the loss from operations was $8 million, an improvement of 33.3 percent.

The active consumer fixed line customer base at 30 September was 441,165, and increase of 0.9 percent compared to the prior year. Broadband customers numbers increased from 39,000 at 30 September 2005 to 125,000 at 30 September 2006. The percentage of customers taking a bundle of services increased from 36 percent at 30 September 2005 to 240,264, 54 percent of the total, at 30 September 2006. A 50 percent year on year increase.

Telecom NZ said: "Competitive conditions impacting on Telecom’s Australian operations continue to be highly challenging. Retail prices continue to decline across all products, while wholesale prices have risen sharply following revisions to key supplier arrangements. This has resulted in a substantial decline in margins. These negative trends have been exacerbated by a deferral of project spend by Telecom’s enterprise customers."

To respond to the challenges, Telecom NZ says it has made significant investment in sales, customer service and IT capabilities to support improved customer acquisition and retention.

"This investment continues to have a negative impact on costs and free cash flow in the short-term. This investment continues in 2006- 07, and is part of a comprehensive strategic programme designed to fundamentally reposition AAPT services in the mass market," the company said.