Telecom lifts first quarter net profit 19pc

9.10am

Telecom Corp today reported its September first quarter net profit rose 19 per cent to $193 million.

The profit bettered analysts' average forecasts of $185m.

Telecom will pay a fully imputed dividend of 9.5cps on December 10.

Telecom said that it remained comfortable with the consensus of analysts's forecasts for a full year net profit of $816m.

Operating revenue for the quarter rose 5.3 per cent to $1.39 billion while earnings before interest, tax, depreciation and amortisation (ebitda) were unchanged at $554m.

Adjusted earnings per share rose to 9.4cps from 8.5c.

The quarterly net profit included an abnormal gain of $10m relating to the sale of 15 retail stores to Australian retailer Leading Edge Group.

Telecom chief executive Theresa Gattung said earnings were on budget.

"The September quarter featured strong performances in mobile and broadband in New Zealand and this is a reflection of the investment initiatives that we are targeting in 2004-2005."

She said the mobile division had the strongest revenue growth in several quarters -- up 13 per cent - with mobile data (texting) again a highlight.

The Telecommunications Commissioner decided recently to regulate mobile phone charges because it assessed New Zealand fees were inappropriately high.

Telecom plans to launch its new third generation mobile service, T3G, next week and Ms Gattung said the company expected this to further stimulate mobile data growth.

Broadband connections continue to grow and Telecom was on target to sign up 250,000 customers by the end of 2005.

The $70m rise in revenue was mainly the result of the acquisitions of IT companies Gen-i and Computerland.

Telecom's troublesome Australian business remained on track with continued growth in customer numbers and services, Ms Gattung said.

Operating revenue in New Zealand was up 9 per cent to $1.05 billion, but up 3 per cent excluding Gen-i and Computerland revenue.

Operating expenses rose 21.4 per cent to $510m, although excluding Gen-i and Computerland up 8.6 per cent.

Data, internet and solutions revenue rose 44.4 per cent to $244m.

Local service revenue fell 1.1 per cent to $267m and is likely to fall further with TelestraClear launching its entry into nationwide residential services last week.

Total toll revenue fell 8.5 per cent to $227m as emailing, use of mobile phones and competitive pressures bit.

Interconnection revenue from other phone companies rose 18.8 per cent to $38m.

Mobile revenues rose 12.9 per cent to $166m with texting revenue up 120 per cent to $22m.

Mobile sales over the September year rose by 92,000 to 1,367,000 and average revenue per user grew 5.2 per cent to $36.40 a month.

Jetstream (broadband) revenue increased 63.2 per cent to $31 million.

Revenue in Telecom's Australian operations, dominated by AAPT, remained static at A$326m ($361m) while ebitda rose 3.6 per cent to A$29m.

Group capital expenditure for the first quarter rose 43 per cent to $130m. Telecom is forecasting to spend approximately $650m during the year.

Telecom shares closed yesterday at $5.91 and have traded between a three-year high of $6.27 in August and $4.87 in the last 12 months.

- NZPA