Telecom New Zealand Q1 earnings halve; wireless and broadband fail to offset decline in fixed lines

5 Nov 2010

Telecom New Zealand has announced operating revenues of NZD1.32 billion (USD1.04 billion) for the three months ended 30 September. This figure represents a 2.9% drop from the NZD1.36 billion recorded a year earlier, reflecting substantial declines in the firm’s fixed line telephony operation. Net earnings slumped in the same period, to NZD83 million, a decrease of 49.1% from NZD163 million a year earlier. EBITDA slipped 0.9% to NZD443 million.

Mobile revenues decreased by 5.2% in Q1 from NZD212 million to NZD201 million, while data revenues slipped from NZD161 million to NZD156 million, a drop of 3.1% year-on-year. Broadband and internet revenues remained unchanged at NZD149 million. Local fixed telephony revenue fell 3.7% from NZD567 million to NZD546 million. In operational terms, Telecom ended the quarter with 839,000 customers on its new XT mobile network, up by 127,000 quarter-on-quarter. The total mobile subscriber base (including XT customers) was 2.15 million as at 30 September, down 0.9% year-on-year. Meanwhile Telecom Retail had 1.12 million local access lines in service at the same date, whilst the number of broadband connections stood at 581,000, a rise of 6.6%.

New Zealand Telecom CEO Paul Reynolds commented: ‘Operational performance was satisfactory with good cost control offsetting significantly higher regulatory costs and intensifying competition. Telecom absorbed NZD16 million of new regulatory costs, and the impact of the Canterbury earthquake of around NZD3 million, to achieve EBITDA that was on target and within market expectations. The New Zealand market continues to reflect the global trend of declining overall telecommunications revenues. Growth in services such as mobile, broadband and ICT is only partially offsetting declines in traditional fixed line and voice services. However, the rate of fixed access line loss and fixed to mobile substitution remains somewhat less in New Zealand than many overseas countries, probably reflecting the unusually wide availability of free local calling from Telecom’. Nick Olson, Telecom CFO, used the opportunity to confirm that, going forward, Telecom will move to semi-annual reporting, with its first semi-annual report scheduled for the six months ending 31 December 2010.

New Zealand, Spark New Zealand Group