Cable, Australia provide cheer in Telecom NZ results

Telecom New Zealand Ltd. has recorded half-yearly earnings of NZ$300 million (US$128.9 million), roughly in the middle of analysts' estimates.

Telecom said the result was down on the same period last year as a result of costs flowing from its "growth initiatives" in Australia, including the takeover of AAPT Ltd..

While total revenues of NZ$2.67 billion were up only 2.3 percent, Telecom's vastly greater stake in Australia through its acquisition of AAPT saw Australian revenues up 50 percent over the same period last year. The other bright light for the company, which has seen its share price sag in the past year, was the financial performance of Southern Cross Cable Networks, in which Telecom has a 50 percent stake.

"Telecom is delighted with the performance of the 50 percent-owned Southern Cross Cable network which came into service during November, with a vast expansion of bandwidth in and out of Australasia," said chairman Roderick Deane. "From this investment, we expect an initial dividend of approximately US$100 million this financial year."

Data revenues, driven largely by growth in IP network-based products such as JetStream, grew 14.1 percent and Internet revenues in New Zealand increased 15.6 percent on the back of what the company described as "rapid growth in customers and usage". The AAPT-owned ISP Internet and e-commerce business in Australia saw revenue grow 64 percent.

Deane hailed "significant progress" for the company over the half year, citing the successful completion of Telecom's full takeover of AAPT and the start of a major business relationship with the Commonwealth Bank of Australia.

Deane said the roll-out of Telecom's CDMA cellular network in New Zealand remained "firmly on track" while the mobile business achieved record growth in customers.

He also said it was "pleasing to see uncertainty removed around the future regulatory regime for telecommunications in New Zealand. The Government's new policy should allow robust competition to continue and provide the flexibility Telecom needs to develop its business."

Telecom will pay a fully-imputed dividend for the second quarter of 2000 of NZ$0.05 per share, unchanged from the first quarter. The dividend will be paid in New Zealand and Australia on 16 March 2001, and in New York on 23 March 2001. A 3 percent discount to current market price will apply to shares issued under the dividend reinvestment scheme.

Deane said the board and management were committed to lifting the performance of Telecom in the short term, as well as to improvement in earnings over the long term through transformation into an Australasian online and communications group.

Story courtesy of Computerworld New Zealand.

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