Telecoms old P.O.’s only profitable area

Press, 23 September 1987, Page 35

Telecoms old P.O.’s only profitable area

PA Wellington Telecommunications services were the only branch of the former Post Office to show a profit in the year to March 31, according to the office’s annual report, tabled in Parliament The report was the final one presented by the Post Office, as its assets were divided into three Stateowned enterprises on April 1. The Post Office’s total profit for the year rose 46 per cent to $238 million compared with $162 million in 1986. However, its dividend payment to the Government was 12 per cent lower at $56 million, against $64 million the previous year. During the year $634 million was spent on capital investment, most of that figure going on telecommunications. Demand for almost all telecommunications services grew, and at times it was difficult to meet fully

that demand because of a lack of skilled staff, the report said. Planning for corporatisation had also drawn off resources. The Telecommunications Division made a profit of $327 million, up 69.2 per cent on 1986. The report said the postal branch’s profitability was affected by higher transport costs, absorbing GST costs without passing them on through higher charges, and the need to price a number of services at levels below cost recovery. Institutionalised overstaffing and a failure to introduce stringent cost controls also harmed the business, the report said. However, standards for all types of letter and parcel deliveries improved during the year. The postal service showed a loss of $l3 million, compared with a loss of $lO million in 1986. Deposits held by the banking branch grew 7

per cent to $2964 million during the year to March 31. Home mortgage and personal lending increased 10.4 per cent, with a total of $1067 million in loans outstanding at the end of the financial year. The banking branch lost some of its market share because of intensive competition, but as an S.O.E. it would now be able to make its own decisions based on commercial criteria. The branch showed a loss of $5O million, compared with a $l4 million loss in 1986. The Post Office’s agency business ran at a loss, because many of its operations were still run manually, incurring substantial labour costs and overheads, the report said.

The business lost $24 million this year, compared with a loss of $6 million in 1986.