KEY POINTS:
Telecom shareholders reacted negatively to this morning's profit announcement by trimming over two per cent off the telco's market value.
The company fell 12 cents early, to $4.35.
Telecom has announced a full year profit of $3.02 billion, boosted by a one-off abnormal gain of $2.08 billion from
the sale of the Yellow Pages Group.
Adjusting for one-off items, the country's largest listed company reported a net profit after tax of $955 million for the 12 months to June 30.
That was an increase of 16.5 per cent compared with the $820 million for the same period in 2006.
The company is in the midst of major change, being ordered by the Government to open its network to competitors and split into three separate operating units.
In late June it also announced the appointment of British Telecom executive Paul Reynolds to replace outgoing chief executive Theresa Gattung.
Following today's announcement, it said it would pay a fully imputed ordinary dividend for the quarter ended June 30 of 14.5 cents per share.
In New Zealand operating revenue was up 1.2 per cent for the year to $4.3 billion and up 1.4 per cent for the June quarter to $1.09 billion, Telecom said.
Higher operating revenues for mobile, IT services and other operating revenue were partly offset by declines in interconnection, data and internet, Telecom said.
Telecom said higher net earnings reflected lower tax expense and depreciation and amortisation costs.
Acting chief executive Simon Moutter said the fourth quarter result was in line with expectations.
"Mobile revenue growth is now slowing and this reflects competitive intensity and market penetration in excess of 100 per cent," he said.
Low single digit revenue growth was expected to be sustainable in the current environment.
Both the consumer and wholesale broadband businesses had revenue growth in the fourth quarter.
Telecom's IT business Gen-I had performed strongly in the fourth quarter and for the full year with double-digit annual growth being posted in both periods, Mr Moutter said.
Telecom said national calling revenue for the year was down 7.5 per cent to $534 million, while international revenue was up 11.1 per cent to $380m.
The company said it had responded to increased competition by launching new monthly subscription plans for customers.
The impact of lower mobile termination rates was reflected in an 8.2 per cent fall in interconnection revenue for the year to $146m.
Total mobile revenues increased 5.4 per cent to $816m, with voice revenues down 0.8 per cent to $522m and data revenue up 27.5 per cent to $218m.
Total mobile connections at June 30 was 1.98m, compared to 1.7m a year before. Net mobile connection growth for the June quarter was 41,000, an increase of 2.1 per cent on the previous quarter, Telecom said.
Total data revenue in New Zealand eased 3.9 per cent to $421m for the 12 months and by 6.3 per cent to $104m for the June quarter, Telecom said.
The decline reflected the migration away from legacy data products, and a reduction in wholesale data prices.
Total New Zealand broadband revenue rose 3 per cent for the year to $274m, with consumer revenue up 27.9 per cent to $156m and business revenue down 37.3 per cent to $69m.
That reflected a large reduction in business broadband pricing when business and residential prices were aligned last October, Telecom said.
Telecom said it would pay a fully imputed ordinary dividend for the quarter ended June 30 of 14.5 cents per share.
In Australia, annual operating revenue was down 3.5 per cent to A$1.15b, with earnings before interest, tax, depreciation and amortisation down 41.3 per cent to A$44 million, and the loss from operations down 65.8 per cent to A$26m.
Telecom said its capital spending increased 12.4 per cent to $844m, and it was forecasting capital expenditure of $950m to $975m for the 2007/08 financial year.
The company said 2008 net profit would be between $680m and $720m, affected by the loss of earnings from Yellow Pages and lower revenues from the New Zealand market.
- NZPA
