Telecom New Zealand has reported a 43.9 percent fall in full year net profit to US$271.8 million, continuing a recent downward trend.
Adjusted revenue for the year to June 30 dropped 2 percent on the prior year, to US$3.8 billion, while adjusted expenses were US$2.6 billion, a 1 percent increase on the prior year. The decline in revenue was primarily driven by declines in the company's Retail division and AAPT, which were offset by growth in Wholesale and International, Telecom said today.
Adjusted earnings before interest, taxation depreciation and amortization (ebitda) of US$1.2 billion were in line with guidance and a 6.5 percent decline on the prior year. Telecom said it was maintaining its guidance for adjusted EBITDA in the 2010 financial year to a range between a fall of 1 per cent and a gain of 2 per cent, compared to 2009, subject to potential risks arising from the economic downturn.
A fourth quarter dividend of US$0.04 a share was declared, compared to US$0.05 last year. Telecom highlighted an adjusted net earnings figure, which fell 32 percent to US$329.8 million.
That was due to a combination of a 20 per cent rise in depreciation and amortization costs, and a 32 percent increase in net finance expenses. Those increases were partially offset by a 37 percent fall in adjusted income tax expense.
Adjustments included an impairment charge of US$46.4 million to write-off the carrying value of goodwill held relating to the acquisition of PowerTel, and a US$22.5 million impairment charge relating to mobile network equipment as a result of the launch of the XT Mobile Network, both in the second quarter.
In the fourth quarter a US$8.2 million gain relating the sale of an undersea cable was also recognized. In the fourth quarter net earnings fell 55.7 percent, from a year earlier, to US$53.3 million. On an adjusted basis fourth quarter net earnings fell 60.3 percent to NZ$47.8 million.
Telecom chief executive Paul Reynolds said the company had made significant operational and service improvements on a broad range of fronts in what was a big year for Telecom. The XT Mobile Network was launched and significant progress made on the rollout of fiber-to-the-node broadband.
Expenses growth was driven partly by increased staffing levels to meet additional client demand in Gen-i and the establishment of Chorus as a separate business unit, as well as salary inflation.
A focus on labor cost control had resulted in labor costs reducing in the fourth quarter. In the mobile market, connections declined by 26,000 over the fourth quarter, Telecom said. That was due to subdued activity before the May 29 launch of XT mobile. In the last month, after the launch, connections growth was strong.
The XT network's impact would become apparent in the next quarter's results, but Telecom nevertheless had 165,000 customers on XT by August 14, Reynolds said.
Positive early average usage trends were seen, such as a 20 percent rise in voice traffic, and a 300 percent increase in data download traffic compared to Telecom's CDMA network. Growth in the fixed broadband market was somewhat slower towards the year end partly due to increased market penetration.
Telecom Retail's share of net broadband connection growth was 44 percent, with its overall share of broadband connections at 57 percent. At Telecom Retail, EBITDA was down 6 percent in the fourth quarter to US$122.9 million when compared to the equivalent quarter in the prior year.
GEN-i had a 15 per cent fall in EBITDA in the latest quarter to US$73.1 million. The quarter saw US$304.6 million in client contracts closed, bringing the total to US$819.4 million for the year to date.
At Chorus EBITDA was up 2 percent to US$95.6 million in the fourth quarter. Chorus chief executive Mark Ratcliffe said 780 cabinets were installed by the end of the quarter, meaning more than 160,000 customers now have access to fiber-to-the-node services.
The Wholesale and International unit had a 20 percent fall in fourth quarter ebitda to US$69 million compared to the equivalent quarter in the prior year. That reflected pricing changes, increased costs from operational separation and some one-off items.
At Australian unit AAPT EBITDA lifted 10 per cent to US$18.4 million in the fourth quarter.
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