Telecom New Zealand Quarterly Profits Rise

Telecom New Zealand has posted revenues for the first three months of this year (3rd fiscal quarter) of NZ$1.4 billion (US$830 million) - up slightly on the NZ$1.39 billion a year ago. Net profits rose to NZ$159 (US$94.2 million) from NZ$140 a year ago.

"In a quarter of continued delivery for our customers, Telecom has again improved its market competitiveness through many enhancements to customer service and experience, greater product offerings and improved reliability. Further, we have met our far-reaching commitments and all key capital investment programmes have remained on track," said chief executive officer Paul Reynolds.

"The stronger performance in this quarter reflected the Southern Cross dividend and a significantly lower cost of sales in mobile as we prepared for the launch of our new mobile network in May. Guidance of Group NPAT of $460m to $500m for the full year is unchanged."

Telecom has assessed the impact of the slowing economy at up to NZ$10 million during the quarter, consistent with both Q1 and Q2.

"While economic slowdown continues to have an impact, and we note worsening trends in other sectors, the impact on Telecom's operations has remained consistent at up to $10m each quarter this financial year," said Dr Reynolds.

The mobile market growth continued to slow, with Telecom's net connections falling in the quarter prior to launch of the WCDMA Network. Post-paid showed an increase of just 4,000 external customers in the quarter, while there was a net loss of 16,000 pre-paid connections in the same time period.

Telecom is maintaining its guidance for EBITDA at -1% to +2%, subject to potential risks arising from the economic downturn which had not started when the guidance was set. In addition, Telecom now expects CAPEX of NZ$1.1 billion to NZ$1.2 billion, due to foreign exchange effects which were highlighted during the Q2 results. Telecom expects depreciation and amortisation to exceed NZ$1 billion.

Posted to the site on 8th May 2009