Strathfield: Telstra Has Lost Its Edge
Sydney Morning Herald
Tuesday May 9, 2000
Strathfield Group has warned that a drop in Telstra's share of the mobile telephone market has wounded its own cellular phone business and all but wiped out the electronics retailer's earnings in the second half.
Trading in the six months to June is expected ``to contribute little" to Strathfield's earnings for the full-year, the company said.
The chief executive Mr Andrew Kelly, said Strathfield has suffered through Telstra's inability to meet promised targets, particularly with regard to the new CDMA network.
He said, for example, that Telstra had promised to connect 750,000 new subscribers to its CDMA network in the year ended June 30 but are ``a country mile away from achieving that number.
``We are the number one connector to Telstra, but Telstra has lost its edge in the market. ``They aren't competitive with other networks," he said.
Strathfield is a major retailer of mobile phones for use on Telstra's network. In the past year, Telstra's share of the mobile telephone market has dropped from 54 per cent to 48 per cent.
Weak mobile telephone sales also restricted Strathfield to an 8.5 per cent rise in first-half earnings to $6 million.
``The mobile phones were a fairly secure annuity stream for the company but the surprise in the profit warning is the leverage [that] it suggests Strathfield has to Telstra," said one analyst. ``It is far more than anticipated."
Strathfield has retained 30 per cent of its stake in its electronic commerce subsidiary Eworld, but offloaded the rest to Mr Warwick Mirzikinian and Robert Melhem, founders of One.Tel dealer Onefone Australia.
Strathfield fell 3c to $2.42. The profit warning was issued after the close of trading.
© 2000 Sydney Morning Herald
