Telecom NZ profit halves

Dylan Bushell-Embling
05 Nov 2010
00:00

Telecom New Zealand has reported a nearly 50% slump in September quarter profit, as revenue in key segments and government subsidies shrank.

Net earnings fell 49.1% to NZ$83 million ($66m), Telecom NZ said.

The bottom line was hit by NZ$16 million worth of regulatory costs, accrued from the removal of its annual Telecommunications Service Obligations (TSO) subsidy for providing services to unprofitable areas, funded via levy through Telecom's competitors.

The TSO has been replaced by the Telecommunications Development Levy (TDL). While the TDL will also be sourced from rival operators, the fund is expected to average NZ$50 million annually, compared to the NZ$70 million TSO.

Telecom's profits were also impacted by NZ$3 million in costs from the Christchurch earthquakes in September, which caused damage to equipment and disrupted services.

Revenue fell 2.9% to NZ$1.32 billion, while ebitda dipped 0.9% to NZ$443 million. Telecom CEO Paul Reynolds said the operator was, like many traditional fixed-line operators, feeling the pressures of the shrinking home phone market.

“Growth in services such as mobile, broadband and ICT is only partially offsetting declines in traditional fixed line and voice services,” he said. “However, the rate of fixed access line loss and fixed to mobile substitution remains somewhat less in New Zealand than many overseas countries.”

Related content

Follow Telecom Asia Sport!
Comments
No Comments Yet! Be the first to share what you think!
This website uses cookies
This provides customers with a personalized experience and increases the efficiency of visiting the site, allowing us to provide the most efficient service. By using the website and accepting the terms of the policy, you consent to the use of cookies in accordance with the terms of this policy.