Telecom posts $199m first quarter profit

Theresa Gattung

WELLINGTON - Strong growth in mobile and internet broadband revenue boosted Telecom's first quarter profit by 3 per cent to $199 million.

The result, for the three months to September 30, beat analysts' expectations of $194.5 million and compared with an adjusted $193 million for the same quarter a year earlier.

The adjusted 2004 result reflects a $10 million abnormal gain on the sale of Telecom's retail stores during the September quarter last year.

Telecom has joined other companies in adopting International Financial Reporting Standards, and now excludes the amortisation of goodwill.

Telecom chief executive Theresa Gattung said today's result showed that both broadband and mobile services were continuing to gain traction, despite increased competition from global mobile giant Vodafone and rival internet operators.

Telecom announced today it achieved a target of 250,000 broadband customers in early October, just after balance date and two months ahead of schedule.

The tel co, the country's biggest listed company, is mirroring a worldwide trend towards increased revenue from mobile and internet businesses, set against declining revenue from its traditional fixed line services.

Earnings before interest, tax, depreciation and amortisation (ebitda) fell 2 per cent to $532 million in the quarter.

In Telecom's fixed line business, national calling revenue declined 6.3 per cent to $150 million. This was partly offset by an 11.3 per cent rise in international calling revenue to $89 million, giving a stable total of $251 million.

Mobile revenue climbed 13.3 per cent to $188 million, while broadband and internet revenue rose by 25.8 per cent to $83 million.

There was no news today on the speculated sale of Telecom's troubled Australian subsidiary AAPT.

Total revenue at AAPT fell 7 per cent to A$159 million in the quarter.

Telecom will pay a fully imputed dividend of 9.5 cents per share on December 9.

Shares in Telecom touched a 13-month low of $5.71 on Wednesday, a fall analysts attributed to increased government regulation that is likely to destroy the company's market dominance.

They closed yesterday at $5.85.

- NZPA