Telecom posts $916m profit

Telecom CEO Theresa Gattung. Picture / Fotopress

New Zealand's largest listed company, Telecom, today reported a 21.5 per cent rise in its full year profit -- boosted by strong growth in its mobile and internet businesses -- and said it will pay a special dividend of 10cps.

The company booked a net profit of $916 million for the 12 months to June 30. After one-off gains, the result was up 4 per cent at $806 million -- almost bang on consensus estimates of $807 million.

Today's eagerly anticipated special dividend will cost Telecom about $195 million, against analysts' expectations of up to $400 million, or 20cps.

Telecom said it will pay a further 10cps in special dividends in the 2005/06 year, taking the total payout to $391 million.

It will also pay an ordinary dividend of 10cps for the final quarter to June 30, 2005, up from 9.5cps in the same period a year earlier.

The company posted a final quarter net profit of $266m.

Telecom chief executive Theresa Gattung said earnings had been underpinned by a strong performance in the key growth areas of mobile, broadband and IT.

"In mobile, we've had another powerful result recording the strongest quarterly cellular revenue growth in Q4 (fourth quarter) in several years, with strong momentum in both connection and revenue growth," Ms Gattung said.

Telecom has invested heavily in new technology in recent quarters, and the strategy appears to be paying off.

The company released its new third generation mobile network, TG3, last November -- beating rival Vodafone, which is still to release its 3G network.

Telecom's share of the new mobile revenue growth has been climbing strongly ever since, and reached about 60 per cent in the last quarter, up from 51 per cent.

Internet growth was a standout feature of the full year result, with broadband numbers quadrupling from 52,592 to 205,927 during the period. The company is on track to meet its target of 250,000 residential broadband customers by the end of 2005.

Including business customers, Telecom had a total of 259,498 broadband connections as at June 30.

Ms Gattung said investment in mobile, broadband and IT was helping offset declines in calling revenues.

Full year operating revenue was $4.3 billion, up 9 per cent, with revenues for local services down 1 per cent to $1.06 billion and residential access lines stable on $1.4 million.

Total call revenues were down 7.8 per cent to $898 million. National calling fell 5.2 per cent to $623 million and international call revenues fell 13.8 per cent to $232 million.

On the flipside, total mobile revenues rose 15.8 per cent to $709 million. Voice revenue was up 4.9 per cent at $513 million, and data revenue rose 119.6 per cent to $112 million.

Total connections as at June 30 were 1.6 million, up 18.4 per cent on the previous year.

Data revenue rose 14 per cent to $588 million, with broadband revenue 61.7 per cent higher at $152 million.

Telecom's Australian offshoot AAPT continued to be a thorn in its side, with total revenue declining 1.2 per cent to A$601 ($679.24 million) as the unit faces "intense price competition across most product lines".

Capital expenditure (capex) increased by $95 million to $703 million during the year, as Telecom's focus on developing new technology continues.

Telecom expects capex to rise to $750 million in 2006, with additional upside potential of $25 million.

Shares in Telecom, which accounts for a quarter of the benchmark NZSX top 50 index, closed yesterday at $6.32.

- NZPA