KEY POINTS:
Telecom signed up 100,000 new mobile subscribers (more than rival Vodafone) in the December quarter, but half-year trading profit fell.
The company reported adjusted net profit of $461 million, up from $395 million for the six months ending December 31, on revenue of $2.93 billion up from $2.85 billion.
Forsyth Barr senior analyst Jeremy Simpson said the result was below expectations at the operating level.
"The headline number was better ... the reported profit for the quarter was higher than people were expecting but it was boosted by lower tax being paid," Simpson said.
The adjusted earnings reflected a $65 million tax credit from the writedown of Australian assets in the previous year.
"But if you look at the actual operating earnings of the business they were slightly lower than we were expecting and that was driven by operating cost growth in New Zealand being a little bit higher than we were forecasting."
Operating expenses grew 5.9 per cent for the half-year to $1.89 billion - a larger rise than the 2.6 per cent rise in revenue.
The closing cost-revenue gap meant adjusted trading profit (earnings before interest, tax, depreciation and amortisation) fell 2.9 per cent to $1.04 billion.
Mobile revenue for the half-year rose 8.7 per cent to $413 million, with a net 100,000 new mobile customers in the December quarter compared to 89,000 at Vodafone. This was the eighth quarter out of the past nine that Telecom has trumped Vodafone in the race to secure more mobile customers.
Chief executive Theresa Gattung - who resigned yesterday - said the December quarter included a strong performance from both mobile and IT services.
"Mobile penetration in New Zealand is now close to 100 per cent so we expect connection growth will slow in the near to medium term," she said.
"Future revenue growth will be determined more by applications and content."
The result included an abnormal gain of $20 million from the sale of a 90 per cent stake in Telecom Samoa Cellular, restructuring costs of $27 million and provision of $16 million to fix billing issues. Telecom's calling revenue was up 2.9 per cent at $503 million and broadband revenue grew 4.6 per cent to $137 million.
