Telecom profit forecasts slashed

Paul Reynolds. Photo / Dean Purcell

Telecom shares fell 6c to $2.18 when they resumed trading today after the company cut earnings guidance for its financial years from 2011 to 2013.

The company said it guidance for its 2010 financial year remains unchanged.

Earnings before interest and tax and depreciation and amortisation (ebitda) for its financial 2011 year is cut to between $1.72 billion to $1.78 billion. It previously predicted a 4 per cent to 6 per cent rise to between $1.82 billion to $1.855 billion.

For the 2012 financial year the company had been predicting ebitda would rise by $70m to $110m. This is now predicted to rise between $20m to $80m.

For the financial year 2013 ebitda guidance has been cut to a rise of $20m to $80m from previous guidance of a rise of between $75m and $115m.

The changes to guidance reflected government regulatory decisions, and a softening revenue outlook due to lower mobile revenue growth, price pressures in voice and data markets, flow on impacts of the economic downturn, management initiatives to drive harder on cost out programmes outlined in May 2009.

Telecom expects capital expenditure to reduce from $1.1 billion to $1.2b in its 2010 financial year to between $1b and $1.1b in its 2011 financial year.

Telecom chief executive Paul Reynolds said the company was open to working with the Government on a full range of approaches to its ultra-fast broadband initiative.

"Our focus is on delivering the best result for Telecom shareholders and New Zealanders."

- NZPA