Telecom pulls international voice business from sale

Telecom chief executive Paul Reynolds Photo / Paul Estcourt

Telecom, the country's biggest phone company, has withdrawn its international voice business from sale after failing to attract a suitable price.

Chief executive Paul Reynolds told a conference call there were a number of similar assets up for sale in the market and that meant it was difficult to get a compelling offer for the business that brokers toll carriage for international phone companies.

Telecom will now focus on restructuring the unit, which has registered high growth in a low margin part of the market, with a view to stripping out costs, he said.

"That business is no longer for sale," Reynolds said in response to a question from UBS analyst Richard Erie. "There were no buyers at the right price."

The decision comes as Telecom continues to focus on stripping out costs from its business, with research house IDC flagging revenue growth of just 1 per cent until 2014 in the telecommunications sector.

The phone company today announced it expects to trim its capital expenditure programme, forecasting investment of between $900 million and $930 million this financial year, and a limit of $750 million in 2012.

Telecom's capex peaked in 2009 at some $1.3 billion after it was forced to improve its network infrastructure and pave the way for greater competition after the previous administration imposed an operational separation on the company.

The company said it has met key milestones under the operational separation requirements, and along with the near-completion of its ethernet backhaul deal and lower costs in Australia after the divestment of AAPT Consumer, these helped bring down the forecast cost of investment.

Reynolds said the government's decision on who it will partner with to roll-out a nationwide ultra-fast broadband network to be "imminent" and the company will unveil its future strategy based on the outcome once it's made.

The company reaffirmed full-year adjusted earnings before interest, tax, depreciation, and amortisation guidance at between $1.72 billion and $1.78 billion.

The shares rose 1.6 per cent to $2.22 in trading today, and have slipped 2.1 per cent this year.