A newly-demerged Telecom reported an adjusted net profit of $240 million for the first half to December 31, up 51 per cent, and said it would buy back $300m worth of shares this year.

The net profit came to $1 billion, unadjusted, including the five months of trading before the demerger of Chorus on November 30 and one month of trading as a slimmed down Telecom.

Telecom announced a first half dividend of 9 cents per share.

The result included a large, non-cash accounting adjustment to demerger, as well as several other one-off items.


The company said that it intended to launch an on-market share buyback to acquire a maximum of 200 million ordinary shares for an aggregate purchase price of not more than $300 million, this calendar year.

Last November, Telecom separated its terrestrial network operations, Chorus, from the company and made it a separate, stand alone, entity.

Telecom became a retail business, but retained its mobile network.

Looking ahead, the company forecast second half earnings before interest, tax, depreciation and amortisation of $560m and an adjusted net profit of $160m to $190m.

Telecom said its capital expenditure in the second half would be $190m to $220m.

Telecom chief executive Paul Reynolds said Telecom continued to deliver operating performance gains during the half year.

He said the demerger was "probably the most complex corporate transaction in recent New Zealand history" and a world first for a telco.

But the demerger had made year-on-year financial comparisons complicated.


"However, the ongoing operational improvement in Telecom's continuing business is clear after adjusting for the significant non-cash accounting and other impacts of the demerger," he said in a statement.

The adjusted results removed the impact of a number of one-off items, the most significant of which relate to the demerger, to provide a clearer view of the underlying operational performance of the business.

The demerger-related largest adjusting item is an $863m non-cash gain on the demerger of Chorus.

Telecom said its mobile NZ mobile revenues were up 12 per cent when compared to the first half of the prior financial year. This was primarily due to an increase in device revenues relating to a change in subsidy accounting.

Average revenue per user (ARPU) increased 9 per cent, driven by very strong data growth.

In broadband, New Zealand revenues were up 5 per cent during the half, through a combination of a 7,000 increase in connections during the half and a 2 per cent increase in ARPUs.

Information technology services' earnings before interest, tax, depreciation, and amortisation increased as costs continued to decline.

Telecom's traditional access and calling revenues continued to decline at around 4 per cent during the period, in line with worldwide trends.