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Telecom NZ lifts earnings
AUCKLAND, New Zealand (Reuters) -- New Zealand's largest listed company Telecom Corp. of New Zealand says quarterly net profit rose 11 percent on the back of lower interest costs, but operating earnings were flat because of increased competition. Net profit revealed Wednesday for the first quarter ended September 30 was NZ$162 million ($99 million), compared with a NZ$146 million profit a year earlier. The figure was in line with analysts' expectations. Telecom, which owns Australian telecommunications company AAPT, has driven profit growth in the last few years by cutting costs and capital spending in a bid to maintain its investment grade credit rating. Telecom's mobile business has lost ground to the New Zealand arm of Britain's Vodafone Group, while revenue at AAPT -- the number three telco in Australia -- dropped as it shed less-profitable consumers and invested in marketing to target the more lucrative business sector. "The major positives are the New Zealand business, they continue to get pretty good margin growth there," Scott Ryall at Macquarie Equities said. "In Australia you are seeing no real sign of turnaround yet," he said. Core earnings, which exclude interest and tax, were NZ$345 million, compared with NZ$340 million in the year-ago period. Net debt stood at NZ$4.42 billion at the end of first quarter, down from NZ$4.69 billion three months earlier, and 14.8 percent lower than the first quarter in 2002. The sharply reduced debt was reflected in Telecom's interest bill, down NZ$12 million from a year earlier to NZ$94 million. Total revenue in the first quarter was slightly higher at NZ$1.32 billion from NZ$1.31 billion a year ago, while operating expenses were up fractionally to NZ$767 million. "We are still seeing significant price pressures in voice calling in both New Zealand and Australia. But we are making good progress with the new growth areas of our business such as data and IT services," Telecom Chief Executive Theresa Gattung said. Telecom shares closed 1 percent lower Wednesday at NZ$4.90. The stock has risen 8.2 percent so far this year, underperforming a 19 percent gain in the NZSX Top 50. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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