Telecom N.Z. Full-Year Net Slumps 57% on Asset Writedowns
August 18, 2011, 5:27 PM EDTBy Tracy Withers
(Updates with asset impairment in second paragraph.)
Aug. 19 (Bloomberg) -- Telecom Corp. of New Zealand Ltd. the nation’s biggest phone company, said full-year profit more than halved after it wrote down the value of assets.
Net income fell 57 percent to NZ$164 million ($135 million) in the 12 months ended June 30, from NZ$382 million a year earlier, Auckland-based Telecom said in a statement. The result included a NZ$257 million asset impairment charge.
Telecom in May agreed to partner the government in building a faster broadband network, placing it on course to split into two companies later this year, subject to shareholder approval. The Chorus unit will become a separately listed wholesale network infrastructure operator, while Telecom Retail will become a provider of mobile and fixed-line services to end users.
“We are well prepared for the fiber future and the imminent changes to industry structure,” Chief Executive Officer Paul Reynolds said in the statement. The company made no further comment on the new structure.
The asset impairments “relate to the development of assets to comply with regulatory undertakings,” the company said. Changes to industry structure means a number of these assets are no longer relevant, it said.
Full-year earnings also included an NZ$18 million gain from the sale of the consumer unit of Australian subsidiary AAPT Ltd., NZ$42 million of costs associated with the earthquakes that struck the southern city of Christchurch, and NZ$29 million of spending on preparing the company’s bid to join the broadband project.
Adjusting for items, profit rose 1.6 percent to NZ$388 million, beating analysts’ expectation of NZ$351.3 million.
Adjusted profit before interest, tax, depreciation and amortization rose 2.1 percent to NZ$1.8 billion, bettering the forecast range of NZ$1.72 billion to NZ$1.78 billion, the company said.
Telecom declared a 7.5 cents-a-share fourth-quarter dividend, and will also distribute a special 2 cent dividend.
--Editor: Tim Smith
To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net
To contact the editor responsible for this story: Iain Wilson at iwilson2@bloomberg.net
