Telecom profit plummets 92%

By Paul McBeth

Friday 13th February 2009

Telecom Corp., the country's largest telecommunications provider, posted a 92% fall in second-quarter profit as one-time charges and falling sales dragged down its bottom line.

Earnings fell to $14 million, or 1 cents a share, in the three months ended Dec. 31, from $172 million, or 9 cents, a year earlier, the company said in a statement. Operating revenue fell 1.6% to $1.39 billion. Earnings before interest, tax, depreciation and amortisation tumbled 30% to $98 million.

"The economy continues to be volatile, and while Telecom is not immune to the effects of a downturn the impacts in Q2 were modest," said chief executive Paul Reynolds. "Revenue has been held constant, the business is managing its operational expenses responsibly, and our major capital investments are on schedule."

To help reduce expenses, the company has frozen pay rates for its executive team, who unanimously agreed it was a "prudent and appropriate step." The one-time costs that pulled down Telecom's net profit were the write down in value of its PowerTel asset in Australia by $68 million and mobile network telecommunications equipment following its decision to upgrade the technology for its new mobile network.

Stock in the company rose 0.8% to $2.66 yesterday, having tumbled almost 35% in the last 12 months.

The telecommunications provider said it is still on track to meet its forecast full year net profit of between $460 million and $500 million. Last year it posted a full year net profit of $713 million.

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