KEY POINTS:
Telecom has reported first quarter net earnings of $225 million for the three months to the end of September, unchanged from the corresponding period a year earlier.
Telecom's chief financial officer Marko Bogoievski said today that the company's performance was in line with expectations that Telecom had set at its annual result announcement in August.
Operating revenue from New Zealand operations was down 2.9 per cent to $1.04 billion, the company said.
Ebitda (earnings before interest, tax, depreciation and amortisation) in this country declined 6.9 per cent when adjusted for the $6.5 million one-off costs associated with the migration of email services in the quarter.
Total local service revenue in New Zealand was down 1.1 per cent to $260m, with a decline in access revenue reflecting partly the migration of customers from retail to wholesale, Telecom said.
It also reflected customers using other technologies, including mobile while competitors were continuing to build relationships with customers ahead of new regulated services.
National call revenue was down 9.5 per cent to $124m and international call revenue down 13.6 per cent to $89m.
Total calling revenue dropped 11.1 per cent to $225m.
Interconnection revenue, which includes termination of calls on both fixed and mobile networks, declined 5.4 per cent to $35m.
The decline reflected the impact of lower mobile termination rates.
While mobile connection growth continued, declines in revenues reflected intense price competition and competitor activity, Telecom said.
Total mobile revenues were down 1.5 per cent to $199m, while voice revenues were down 3.1 per cent to $126m. Data revenue rose 11.8 per cent to $57m.
Total data revenue was stable on $106m, with decreases in traditional data services partly offset by an increase in Managed IP data services.
Managed IP data services revenue increased $3m to $46m.
Total broadband revenue rose 4.5 per cent to $69m, with consumer revenue up 27.3 per cent to $42m.
Business revenue declined 43.5 per cent to $13m, reflecting the large reduction in business broadband pricing when business and residential prices were aligned in October 2006, Telecom said.
There were 694,000 broadband connections, including 387,000 residential, 68,000 business, 188,000 wholesale and 51,000 mobile broadband connections.
Increases in wholesale access lines reflected competitors actively targeting residential customers with bundled access and calling plans, the company said.
Wholesale access revenue increased 44.4 per cent to $26m, calling revenue declined 11.1 per cent to $8m, broadband and internet revenue rose 40 per cent to $14m, and total wholesale revenue increased 10.3 per cent to $96m.
Total IT revenue was up 12.9 per cent to $96m, reflecting revenue from new key contracts and procurement business.
In Australia operating revenues were up 9.9 per cent to A$321m ($390.7m), with ebitda up 360 per cent to A$23m.
The loss from Australian operations declined 37.5 per cent to A$5m, Telecom said.
Total group operating revenue for the quarter rose 0.1 per cent to $1.41 billion, while ebitda was $482m, up 0.4 per cent when abnormal items were excluded.
New Telecom chief executive Paul Reynolds said the first quarter result came against the backdrop of growing regulatory and competitive change, for which Telecom was well prepared as the company set out to embrace the opportunities offered by operational separation.
"While operational separation will bring some tough requirements, and is a very complex exercise, we're now moving to an environment in which the need for any further regulation is greatly reduced," he said.
"Now the challenge is to apply the right customer focus to all our strategies and initiatives going forward."
During the first quarter Telecom's Wholesale business was one of the group's top performers, while the performances of IT Services and Telecom's Australian operations were also highlights.
"These strong performances helped balance the impact of the regulatory changes which led to strong competitor activity, particularly in Telecom's Consumer business during the quarter," Mr Reynolds said.
Mr Bogoievski said Telecom Wholesale showed strong gains in broadband connection growth.
Gen-i's success as an IT provider was reflected in higher revenues mostly as a result of customers' businesses growing.
Those customers included Westpac, Ministry of Justice, Yellow Pages and Fulton Hogan.
A fully imputed ordinary dividend for the quarter of 7 cents per share is to be paid, the company said.
Capital expenditure increased 21.3 per cent to $211m in the first quarter, compared with the corresponding three months a year earlier.
- NZPA
