Telecom lowers capital spending guidance

Telecom chief executive Paul Reynolds Photo / Paul Estcourt

Telecom has again lowered its expected capital spending level for the current financial year.

In a third quarter trading update, published today, the company said it now expected full year capital spending to be within a range from $900 million to $930 million.

That is down from a range of $950m to $1 billion indicated in February, which itself was a revision from the $1 billion to $1.1 billion range expected before that.

Telecom also said today its guidance indicated capital spending for the 2012 financial year would be no more than $750m.

Guidance for 2013 had been withdrawn, reflecting the announcement that the capex target for that year, of around $750m, would be delivered a year early, and partly because of uncertainty over the Government's ultrafast broadband (UFB) project.

Telecom chief executive Paul Reynolds said the company remained on track to deliver on full year earnings guidance. That includes adjusted earnings before interest, tax, depreciation and amortisation (ebitda) of $1.72b to $1.78b, and adjusted net earnings between $330m and $370m.

The cut to capital spending came as the company completed significant multi-year programmes of investment, such as the XT mobile network and fibre-to-the-node, and looked to bring its capex-to-sales ratio closer to that if its international peers, Dr Reynolds said.

The XT mobile network continued to grow, with more than one million customers on XT, representing around 51 percent of Telecom's total mobile base, and 77 percent of its mobile revenue.

Telecom's broadband base continued to grow with more than one million customers on the Telecom network, he said.

The company also today announced a third quarter dividend of 3.5c per share.

- NZPA