Telecom NZ revenues drop 7.7%; net profit reaches NZD1bn after Chorus demerger

24 Feb 2012

Telecom New Zealand has announced operating revenues of NZD2.358 billion (USD1.960 billion) for the six months ended 31 December 2011. This figure represents a 7.7% drop from the NZD2.555 billion recorded a year earlier. Six-month EBITDA increased by 3.6% from NZD501 million to NZD519 million year-on-year, whilst net earnings from continued operations reached NZD129 million; net earnings from discontinued operations were reported at NZD877 million. CAPEX for the six-month period dropped 32.3%, to NZD325 million. Telecom notes that the period under review includes five months of trading before the structural demerger of Chorus on 30 November 2011, and one month of post-demerger trading. As such, the result includes a large non-cash accounting adjustment relating to the demerger of Chorus, as well as several other one-off items.

Last year Telecom agreed to a structural separation of its infrastructure business unit, Chorus, from the rest of the company, in order to secure the contract to roll out the bulk of the country’s Ultra Fast Broadband (UFB) initiative. Going forward, Chorus will operate as a nationwide fixed line access network operator, offering services on an ‘open access’ basis, while ‘Telecom’ will function as a retail-focused telecoms business, comprising fixed, mobile and ICT operations. Discussing the demerger, Telecom NZ CEO Paul Reynolds commented: ‘The demerger was probably the most complex corporate transaction in recent New Zealand history and a world’s first for a telecommunications company. I am pleased it has helped deliver real value for customers and shareholders … Due to the demerger timing and the associated accounting impact, year-on-year financial comparisons are 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.’

In operational terms, Telecom ended 2011 with 1.023 million fixed lines in service, whilst the number of broadband connections stood at 598,000. At the same date Telecom reported a total wireless subscriber base of 2.031 million, of which 1.392 million were subscribed to its ‘XT’ branded W-CDMA network.

New Zealand, Chorus (New Zealand), Spark, Spark New Zealand Group