Fone Zone blames Telstra for 69 per cent net profit loss

By Craig Zammit

SYDNEY: One of Telstra Mobiles’ biggest resellers, Fone Zone, has reported mixed fortunes in its half yearly results for the period ending 31 December, with earnings before tax, interest and depreciation falling 41 percent to $6.1 million.

On top of the revenue drop, net profit plunged 69 per cent to mere $1.9 million.

Despite the large figure, the 41 percent revenue drop is in line with guidance that Fone Zone issued in December 2006, after declaring it had experienced supply issues of handsets for Telstra’s Next G network, which had just launched the previous month.

“The short-term issues experienced since the launch of Next G are being contained,” Fone Zone chief executive, David McMahon told the Australian Financial Review.

“The Next G network was launched much earlier than previously announced and the unexpected shift between subsidy [phones] and mobile repayment options [mobiles] was not anticipated.

“We have refocused our sales efforts on mobile repayment option handsets and these measures have allowed us to achieve a recover in gross operating margin.”

Fone Zone suggested that on a $600 handset, a gross operating margin of $200 can be achieved, but that sum falls to only $50 under a subsidy model.

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