KEY POINTS:
Telecom chief executive Paul Reynolds unveils his first full-year result for the company on Friday.
He will be conscious that in the volatile sharemarket environment, any unexpected bad news may be severely punished.
The results to June 30 are pivotal for Telecom in the midst of its transition
from an anti-competitive monopoly to a restructured player in a regulated market.
Reynolds laid out the challenges and his recovery plan in April and May investor briefings.
Now one year after his appointment analysts will be looking to see if there are any new barriers on Reynolds' road to recovery.
Results are not expected to reveal anything significantly new, said Guy Hallwright, telecommunications analyst for Forsyth Barr.
But people were going to be looking for any change in parameters spelled out by the company, he said.
In its third quarter results to March 31, Reynolds forecast full-year earnings before interest tax depreciation and amortisation (ebitda) would be $1.88 billion to $1.9 billion.
That is a fall of 7 to 8 per cent and the steepest decline in Telecom's recovery plan.
The decline is forecast to slow in 2009 and then turn around in 2010 and return to growth in 2011.
Investors will be looking closely at results, especially for consumer behaviour in the fourth quarter to June 30.
All businesses face upheavals in the current downturn. But on top of a volatile market and nervous investors, Telecom is adjusting to a new regulatory environment, opening access to its local loop and competition for the growing broadband market.
Meanwhile, well-resourced competitors such as Vodafone are eating traditional revenue sources such as fixed line.
On Friday, analysts will be looking closely at trends in mobile phone market share and revenue mainly for signs that Telecom has slipped further behind Vodafone.
They will also be watching the market share for broadband where Telecom has shown improvements in recent quarters, but at a high cost, limiting profits from the new business.
Telecom will start a new 3G network at the end of the year.
Analysts will be looking for any change in guidance.
Telecom's guidance has been built on the notion for two years of re-tooling as it is split into three divisions.
The plan is to earn more from its wholesale and Chorus division, servicing its competitors.
Tristan Joll, Goldman Sachs JB Were telecommunications analyst, says Telecom had been notably quiet in the news, indicating it was implementing changes.
Paul Richardson of BT Fund management said he would be looking at the results for details about costs and in particular the costs of attracting new customers.
"We have already been shown signs of increased costs," he said.
He said many aspects of the company's return to growth were through cost savings from the long-term advent of next-generation wireless.
"Reynolds has not wanted to be too upbeat about that," he said.
The company's share price has been buffeted with the rest of the market. Telecom closed on Friday at $3.67, down 14c after rallying late last month with other NZX stocks.
Richardson said: "I don't think you can argue Telecom is hugely expensive. You have to look at a share's performance over two years.
"Our concern is that there is not much in the next couple of quarters that is going to drive the share price."
Another fund manager noted the 2008 results would be the last where the Telecom dividend would be imputed, reducing the strong returns that had always buoyed the stock.
