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Vodafone NZ boosts annual profit 25% on lower depreciation, flags new regulatory costs

Thursday 6th October 2011

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Vodafone New Zealand, the country’s biggest mobile phone operator, listed profit 25% in its latest financial year, mainly reflecting lower depreciation charges.

The Auckland-based company reported net profit of $151.5 million in the 12 months ended March 31, up from $121.6 million a year earlier, according to financial statements lodged with the Companies Office.

The bulk of the improvement came from a reduction in its depreciation and amortisation bill to $245.2 million from $261.7 million. Operating revenue rose 6.1% to $1.69 billion.

The result shows Vodafone has managed to retain earnings as it sheds customers to new entrant Two Degrees Mobile. It had 2.458 million connections as at June 30, down from 2.484 million three months earlier.

Vodafone still has the largest market share, followed by Telecom, with 2.097 million customers, and 2Degrees at 580,000.

Telecom reported some $420 million from mobile revenues across all of its units in the 12 months ended June 30, while 2Degrees reported sales of $107.6 million in the year ended Dec. 31.

Vodafone said sales in 2012 will fall by $124 million and earnings will drop by $55 million on the Commerce Commission-imposed cut to mobile termination rates, the amount operators charge each other to end a call on a rival network.

It also expects to spend between $50 million and $80 million of its own cash above its share of the $285 million rural broadband initiative to upgrade high-speed internet services in rural areas over the coming six years.

Vodafone teamed up with Telecom to build mobile cell sites and lay fibre to rural schools.

Vodafone paid a dividend of $130 million, or 84 cents per share, to its British parent, nearly triple the $47 million it paid last year. The mobile phone operator suspended dividends for the previous two years after its $631 million return in 2008.

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