WELLINGTON -(Dow Jones)- Telecom Corp. of New Zealand Ltd. (NZT) Friday said it is lifting its capital spending to strengthen its third-generation mobile-service network coverage and boost its growth in high-speed Internet, data services and next-generation networks.
The company, the country's dominant phone provider, said it wants to spend about NZ$750 million for the fiscal year that ends June 30, 2006, and indicated that it could overshoot that guidance.
The forecast raises capital expenditure from $703 million in the year ended June 30, 2005, and is sharply higher than the NZ$608 million in the fiscal year ended June 30, 2004.
"This is the cycle we're in, both in our New Zealand and Australian businesses, and there are important things going on," Marko Bogoievski, Telecom's chief financial officer, said at a briefing following the company's fourth-quarter results.
Bogoievski said the company's focus remains on strengthening its position in high growth areas, and investing in networks to adapt to rapid changes in technology in the telecommunications industry.
"The faster we go in the broadband area, the more you can expect us to invest in terms of that growth number," he said. "And we expect to continue the large 3G spend in the next year by extending the coverage of our network to all major towns in New Zealand," he said.
Telecom's deliberate strategy of spending up to secure a strong position in the fast-growing mobile-phone, high-speed Internet and data and web-solutions businesses, has started to pay off in recent quarters.
The mobile business in particular, which lagged Vodafone Group PLC (VOD.NZ) for several quarters in revenue growth and market-share terms, has made a strong comeback.
The company's fourth-quarter earnings were underpinned by the mobile division's addition of 74,000 subscribers, better than the 38,000 won by its U.K. rival, which is the world's biggest mobile-service provider. Telecom spent NZ$64 million winning these customers, up 64% from NZ$39 million in the year-ago fourth quarter.
At the same time, capital expenses fell slightly in the quarter, but rose 31% for the fiscal year to NZ$89 million from NZ$68 million the previous year.
Telecom's spending in the broadband, or high-speed Internet, market also rose by a sharp 26% in the latest fiscal year, and Bogoievski expects the company to keep plowing in more money to keep pace with the rapid uptake of its services.
Total broadband connections rose to 267,000 in fiscal 2005, more than double the 120,000 the previous year.
-By Shri Navaratnam, Dow Jones Newswires; 64-4-471-5990; shri.navaratnam@dowjones.com
-Edited by Leslie Shaffer
(END) Dow Jones Newswires"
Posted to the site on 5th August 2005
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