$159m Telecom profit tip

Analysts are forecasting a third-quarter profit of $159 million for Telecom in a telecommunications world of continuing uncertainty.

Australian operations will again be centre-stage, as the market looks for evidence of cost savings and growth at wholly owned Australian subsidiary AAPT.

The $159 million after-tax profit is the average of 11 analysts' forecasts ranging from $145 million to $181 million.

The forecast is marginally down on last year's third quarter of $160 million, excluding the $221 million dividend from Southern Cross Cable.

UBS Warburg analyst Paul Richardson said the main issue was whether earnings from the Australian business would improve and whether they were sustainable.

"Our view is that there have been some one-off gains in the previous quarter so that the spike up you saw in the December may not be sustainable," Richardson said.

Mobile phone margins had been declining in Telecom's New Zealand business. But he expected the core New Zealand telephone business to "chug along pretty well".

Telecom was not expected to tackle the thorny issue of a writedown in the value of AAPT at its third-quarter result. That was expected at the announcement of the full-year result in August.

- NZPA