Telecom New Zealand 2011 first half profit review

The Telecom New Zealand Ltd [TEL.NZX] half year 2011 result out today of NZ$164 million net profit after tax is 32.2% lower than the result for the same period last year. This comes on gross revenue of $2,583 billion, down 3.3% on last year.

This comes in a year of turmoil for the company where its share price plunged and regulatory issues continued to hamper growth and future planning.

Telecom CEO, Paul Reynolds said , ‘Telecom’s delivery of the turnarounremains on track, with EBITDA growth in the second quarter. The quarter saw progress on a range of fronts, including the addition of 60,000 customers in mobile, Telecom Retail attracting 64% of broadband connection growth, reduced fixed line churn and the success of our cost out programme".

I see more of the same for full year 2011. With a stagnant to dropping revenue base the only way profit can grow slightly or stay at current levels is to cut operational costs further. Telecom have tried to do this over the last half but with mixed success as clearly the bottomline shows this.

Shareholders might like to look for more positive news from the company for the medium term 2012-2014 as their foray into the Government fast broadband initiative rolls out and could well mean an end to falling sales.

Until then expect the status quo


Key Points

Net profit: 166,000; Down 32.2%; 243,000

Total operating revenue and other gains
(before adjusting items):

2,583,000; Down 3.3%; 2,671,000

Earnings per share: 9 cps; 13 cps

Second Quarter Dividend: 3.5 cps

Increased competition impacting on margins

2011 HY Profit Detail

Transcript from Investor Briefing
Management commentary
Presentation
Accounts


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