Telecom shares fall on subdued profit
Telecom shares have dropped 5.6 per cent to $2.60 in early trading after it claimed to have fewer but happier customers.
Telecom posted a billion-dollar profit in its first annual result following its demerger, but the under the hood its story was unchanged, with slow growth in mobile and broadband failing to offset a relentless steep slide in its traditional revenues.
Presenting the results, acting chief executive Chris Quin said its share of the retail broadband market had fallen to 50 per cent, from 53 per cent a year ago.
But he said customer satisfaction, across the business, was the highest it had ever been.
The company reported a net profit of $1.157 billion for the year to June 30, aided by accounting changes and a drop in capital and other expenditure.
The period included five months prior to the spin-off of network arm Chorus and the subsequent seven months following its demerger.
Adjusting for the changes to the business, operating revenues fell 8.9 per cent to $4.54 billion, it said.
Telecom grew its mobile revenues just 2 per cent and its broadband and internet revenues by 4.1 per cent, but that failed to offset continuing declines in fixed-line access and calling revenues.
"There have been a number of one-off changes affecting the year-on-year revenue trends, relating to the rationalisation of low margin customers in our international business and in Australia, the impact of mobile termination rate regulation and the effect of the AAPT consumer division sale part-way through the prior year,'' Quin said.
"When these declines are ring-fenced the New Zealand business revenues fell around 2 per cent for the year."
The company said comparisons with previous years were difficult because of accounting changes related to the company's split, but were in line with expectations.
On an ''adjusted'' basis its profit was $422m.
The company declared a second-half dividend of 11 cents, with 75 per cent imputation.
Telecom said it had spent $169m of the $300m it earmarked for its ongoing share buy-back and signalled it might slow down that process, completing it ''over a longer period of time if required''.
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