Telecom profits tumble 38pc

Telecom chief executive Paul Reynolds. Photo / Glenn Jeffreys

Telecom's profits for three months to the end of March have fallen 38 per cent from $159m to $97m.

The company had delivered a "range of positive outcomes" in the quarter, said chief executive Paul Reynolds, including 128,000 growth in XT connections.

The results were released this morning alongside an independent review into the company's failed XT network.

"This result has been delivered in a very challenging operating environment, including increased competition, the continued impact of the economic slowdown, further regulatory interventions and issues with our XT network," he said.

"With the results of the independent review of XT now before us, our focus is on further improving the resilience of the network and translating that effort into further growth in customers," said Reynolds.

Adjusted revenue for the nine months fell by 7.7 per cent to $3.9bn, adjusted operating expenses fell by 10.4 per cent to $2.6bn, a 10.4 per cent decrease on the equivalent nine months.

A third quarter dividend of 6c per share has been declared, with no imputation credits.

Fixed broadband market growth was stronger than in the previous quarter, with Telecom Retail's market share steady at 57 per cent, he said.

Shares of Telecom recently traded unchanged at $2.15 and have slipped 12 per cent this year.

It sank as low as $2.11 in March, the lowest since the early 1990s, when the phone company was a fledgling on the New Zealand stock exchange.

Last month Reynolds cut earnings guidance for 2011 through 2013, reflecting the government's reform of uneconomic rural phone services, which will reduce the amount other phone companies have to pay to use Telecom's lines.

Today the comapny maintained its full year earnings guidance.

WITH BUSINESSWIRE