Telecom Corp, New Zealand's largest listed company, has reported a 13.6% rise in third quarter profit, defying expectations of a lower return, as it cut costs and earned higher dividends from subsidiaries.
The former state-owned monopoly, which has been forced by the government to open its network to competitors, said the result reflected an improved performance as the company works to bring new products and services to market.
"Telecom has again improved its market competitiveness through many enhancements to customer service, greater product offerings and improved reliability," Chief Executive Paul Reynolds said in a statement.
Telecom, which competes with Telstra and British mobile company Vodafone, reported a net profit of $NZ159 million ($125 million) in the three months to March 31 against $NZ140 million a year ago, and an average of $NZ106 million according to analysts polled by Reuters.
Telecom said its guidance for full year net profit was unchanged at $NZ460 milliion to $NZ500 million, which included a decline in earnings before interest, tax, depreciation and amortisation (EBITDA) of 5% to 6%.
Telecom received a dividend of $NZ79 million from its investment in internet cable carrier Southern Cross, compared with $NZ40 million a year ago.
Third-quarter EBITDA rose to $NZ478 million from $NZ469 million last year, beating analysts' consensus of $NZ435 million.
Net profit for the nine months to March 31 was $NZ322 million, down 40% on a year earlier.
Reynolds has said Telecom's plan is to invest heavily in next-generation fixed and mobile technology, which it hopes will restore earnings growth from the year starting July 2009.
The company said it made a record level of capital investment in the quarter of $NZ948 million.
Telecom said fixed line and network earnings declined, offsetting the rise in wholesale, internet and information and communication technology earnings.
Later this month Telecom will launch a $NZ574 million mobile 3G mobile network, which it hopes will wrest market dominance from Vodafone. Mobile revenue fell in the quarter, but costs were also lower, as Telecom shed customer numbers due to less aggressive marketing ahead of the new network launch.
Telecom's Australian arm, AAPT, reported a 6% rise in EBITDA on lower costs.
Telecom will pay a dividend of 6 cents a share, compared with 7 cents a share last year.
Reuters
