New Zealand Telecom reports halving of adjusted earnings

Telecom's FTTH rollout remains on track

Telecom New Zealand Telecom NZ (ASX:TEL) has reported a halving of its adjusted net earnings for the quarter to 30 September, despite the sale of the consumer arm of its subsidiary AAPT. For the quarter to 30 September, Telecom reported adjusted earnings of NZ$83 million, down from NZ$163 million during the previous year’s quarter.

Adjusted operating revenue and other gains were NZ$1.316 billion, down 2.9 per cent year on year.

Detailing the results, Telecom’s Chief Executive, Paul Reynolds, said the New Zealand market continued 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,” he said in an ASX report on the results.

“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.”

Reynolds also noted that despite issues with its XT mobile network earlier in the year, it added some 127,000 new subscriptions during the quarter.

“The XT mobile network continued to grow strongly during the quarter, with 839,000 customer connections at 30 September 2010, representing just under 40 per cent of our total mobile base,” he said.

“On Ultra Fast Broadband, Telecom is continuing to engage in detailed discussions with both Crown Fibre Holdings and the Ministry of Economic Development, and we await further announcements.”

Telecom also noted the rollout of its fibre to the home network remained on track with 292 new fibre-fed cabinets rolled out by Chorus during the quarter.

The AAPT business also recorded revenues of A$252 million for the quarter, down 13.7 per cent year on year from September 2009’s A$292 million. EBITDA declined by A$7 million to A$22 million for the quarter. In August the company claimed success in halting the decline in its revenues, posting a drop in EBITDA of 0.2 per cent for the full financial year to 30 June.

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