KEY POINTS:
Telecom posted a 34 per cent fall in first quarter net earnings to $149 million, while saying it has yet to experience a significant impact from the current economic downturn.
The company said today its earnings before interest, tax, depreciation and amortisation (ebitda) of $466m for the three months to September were 3.3 per cent down on the equivalent quarter in 2007.
Total revenue for the quarter was up 2.3 per cent to $1.44 billion, with total expenses up 5 per cent to $977m and capital expenditure up 63 per cent to $340m.
Telecom declared an ordinary dividend of 6 cents per share, with no imputation credits, compared to 7cps last year.
Chief executive Paul Reynolds said Telecom's results for the quarter were in line with guidance.
When adjusted to exclude Southern Cross dividends, earnings for the quarter were consistent with Telecom's full-year guidance of an ebitda decline of 5-8 per cent.
"These results show the significant investment Telecom is making for the long-term health of the business," Reynolds said.
"With fibre-to-the-node technology, our new 3G mobile network, and operational separation, Telecom's change programme continues apace, and all transformation programmes are on track."
Chief financial officer Russ Houlden said Telecom's balance sheet remained strong, with the company well positioned to meet its commitments.
Reynolds said the key drivers of revenue growth were broadband and IT services, which both delivered double-digit growth compared with the same quarter last year.
"The number of mobile connections grew by 14,000 during the quarter but revenues were down reflecting intense competition.
"Our decision to accelerate the rollout of 3G mobile nationwide will reposition Telecom with a clear competitive advantage as we renew New Zealand's mobile landscape," he said.
Competition in the fixed line area was intense, with a significant increase in competitors migrating customers to unbundled local loop services, contributing to a decline in traditional access and calling revenues.
The Chorus business unit which manages Telecom's local access network had an 8 per cent decline in ebitda, reflecting flat revenues and an increase in labour, maintenance and other operating costs.
Wholesale & International had a 2 per cent growth in ebitda for the quarter up to $109m, reflecting solid growth in the wholesale business which was offset by a decline in International, Telecom said.
The retail division had a 4 per cent decline in ebitda, reflecting a 6 per cent decline in revenues, partially offset by a 7 per cent decline in costs.
Telecom Retail had begun an extensive customer retention and satisfaction programme, the company said.
Gen-i, Telecom's information and communications technology operation for business customers, had an overall ebitda decline of 5 per cent.
The fall resulted from falls in traditional higher margin revenues, despite overall segment revenue growth of 5 per cent and IT solutions revenues up 26 per cent.
Australian subsidiary AAPT had a 24 per cent decline in ebitda for the quarter, when the gain on sale of the stand-alone mobile base the previous year was adjusted for.
The decline in the quarter reflected lower revenues, set-up costs associated with call centre offshoring, and costs associated with the acquisition marketing campaign.
Telecom shares closed at $2.27 yesterday, down nearly half from the year high of $4.46 last December.
- NZPA
