Telecom N.Z. Rises to 23-Month High as Earnings Gain
August 19, 2011, 1:57 AM EDTBy Tracy Withers
(Updates with closing stock price in fifth paragraph)
Aug. 19 (Bloomberg) -- Telecom Corp. of New Zealand Ltd., the nation’s biggest phone company, rose to a 23-month high in Wellington trading after full-year profit excluding charges and one-time items beat the analysts’ forecasts.
Adjusted profit rose 1.6 percent to NZ$388 million ($318 million) in the year ended in June, the Auckland-based company said in a statement today. That beat the analysts’ average expectation of NZ$351.3 million.
“It was a mixture of revenue being marginally better, but it also showed management around the cost line,” Greg Main, analyst at First NZ Capital Securities, said in a telephone interview. “That’s one thing the market was looking at, because top line growth is pretty hard at the moment.”
The shares rose to the highest since September, 2009 after the company also proposed to pay a special dividend in addition to the annual payout. Telecom in May agreed to partner with 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 stock gained 11.5 cents to NZ$2.72 at the 5 p.m. close in Wellington, and was earlier at NZ$2.74. The benchmark index declined. The shares have advanced 26 percent this year.
Telecom, as the company is also known, declared a 7.5 cents-a-share fourth-quarter dividend, and will also distribute a special 2 cent dividend.
Quake Costs
Full-year net income fell 57 percent to NZ$164 million, Telecom said. The result included a NZ$257 million impairment charge related to the development of assets to comply with regulatory undertakings.
“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.
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.
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’s 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. Changes to industry structure means a number of these assets are no longer relevant, the company said.
--Editors: Anand Krishnamoorthy, Garry 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
