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TelstraClear returns to 1H EBIT profit on cost-cutting measures

Thursday 9th February 2012

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TelstraClear, the local subsidiary of Australian phone company Telstra, returned to profit on a pretax earnings basis as it recognised benefits from its cost-cutting programme.

On a standalone basis, the Auckland-based company made earnings before interest and tax of $1 million in the six months ended Dec. 31, turning around an EBIT loss of $8 million a year earlier, it said in a statement. That came as it sliced 7.2 percent from its operating expenses to $270 million, bolstering its earnings before interest, tax, depreciation and amortisation 11 percent to $69 million. Total income fell 4 percent to $339 million.

“Given the current economic conditions, highly competitive telecommunications market, and recent natural disasters, we’re pleased with the financial results,” chief financial officer Alex Ball said. “Our focus for now is top-line growth in the context of income declines.”

Last year TelstraClear recognised one-off costs associated with shifting about 120 call-centre jobs in Christchurch and Paraparaumu to Manila in 2010. It didn’t have the same costs in the latest period.

TelstraClear contributed a loss of A$9 million to the group’s pre-tax earnings of A$2.56 billion. Telstra boosted net profit 23 percent to A$1.48 billion, with a 1.1 percent increase in revenue to A$12.42 billion.

Telstra announced an interim dividend of 14 Australia cents per share.

The parent company said TelstraClear’s fall in first-half revenue was due to a highly competitive market, the cost of the Canterbury earthquakes, and regulated mobile price cuts.

The New Zealand’s capital expenditure rose 2.8 percent to $37 million in the period as it rebuilds it Christchurch network.

TelstraClear’s Ball said the government’s ultrafast broadband programme will increase investment opportunities, though the parent took a A$2 million impairment charge on the unit’s goodwill, saying the future impact of the scheme has “significant uncertainty.”

The dual-listed Telstra shares were unchanged at $4.46 on the NZX.


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