New Zealand's Telecom reports 33.8 pct fall in Q1 profit
November 07, 2008
New Zealand's largest listed company Telecom Corp. said Friday that first quarter net profit fell 33.8 percent due to the impact of increased competition and increased investment.
New Zealand's dominant telecommunications firm said net profit in the September quarter fell to 149 million dollars (88 million US) from 225 million dollars a year earlier.
The result was higher than most analysts' predictions of net profit of around 121 million dollars.
Telecom chief executive Paul Reynolds said the company had not yet seen a significant impact from the current economic downturn, which resulted in New Zealand slipping into recession in the first half of the year.
"While our assessment is that the impact on our group has been relatively mild to date, we will watch unfolding events closely," Reynolds said.
Revenue for the quarter was 1.44 billion dollars, up 2.3 percent from the same quarter last year, while costs rose five percent to 977 million dollars.
Capital spending rose 63 percent to 340 million dollars, reflecting Telecom's determination to invest to ensure the long-term health of the business, Reynolds said.
The company saw double-digit growth in revenue from broadband and IT services, but sales in the mobile business fell.
"The number of mobile connections grew by 14,000 during the quarter but revenues were down reflecting intense competition," Reynolds said.
Competition in the fixed line business also intensified after government moves to break up Telecom into three separate operating businesses, to make it easier for rivals to enter the sector.