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Team Talk half-year profit up 21.6%

Thursday 17th February 2011

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Team Talk lifted half year net profit 21.6% to $2.3 million, with the strong result attributed to the company's strategy of positioning itself as a supplier of niche telecommunications productions.

Revenue for the six months to the end of December was up 2.9% from a year earlier to $15.6 m,illion with the company to pay an interim dividend of 10c per share.

The revenue included $8.7 million from Team Talk's mobile radio operations, and $6.9 million from a division providing ultra-high speed broadband to businesses.

A decline in mobile revenue seen in 2009/10 had eased, with the reason thought to be that customers were slowly starting to reinvest in their businesses in anticipation of an upturn in the overall economy, Team Talk said today.

The broadband business had a stronger upturn, with customer churn dropping back to its historically low level, while demand for new connections was rising and customers were starting to revisit mothballed projects.

"While the upturn in trading conditions that we experienced over the first half has continued into the New Year, it is too early to definitively state that it will be sustained for the rest of year," Team Talk said.

"Nevertheless, we expect to have a similar result in the second half of the current financial year."

A regulatory "haze" that had befuddled the telecommunications industry for the past two years was slowly clearing, with the overall shape of the Government's policies in rural telecommunications, urban broadband and the cellular market starting to emerge, the company said.

Broadly speaking those policies would increase the penetration of generic broadband products and leave the markets for Team Talk's specialised products largely unaffected.

It was expected new opportunities in the market gaps those policies would inevitably create would become increasingly apparent in the next year, Team Talk said.

The company was one of two shortlisted bidders for the Wellington portion of the Government's UFB tender but the success of its focused niche strategy had allowed it to relax activities in that area.

"This has proven to be somewhat fortuitous as the whole UFB process has become something of a moving feast and the economics of the plan remain very challenging," the company said.

Team Talk shares were up 3c to $2.10 in mid-afternoon trading.



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