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Telecom lowers expected capital spending guidance

Friday 6th May 2011

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Telecom has again lowered its expected capital spending level for the current financial year.

In a third quarter trading update, published today, the company said it now expected full year capital spending to be within a range from $900 million to $930 million.

That is down from a range of $950 million to $1 billion indicated in February, which itself was a revision from the $1 billion to $1.1 billion range expected before that.

Telecom also said today its guidance indicated capital spending for the 2012 financial year would be no more than $750 million.

Guidance for 2013 had been withdrawn, reflecting the announcement that the capex target for that year, of around $750 million, would be delivered a year early, and partly because of uncertainty over the Government's ultrafast broadband (UFB) project.

Telecom chief executive Paul Reynolds said the company remained on track to deliver on full year earnings guidance. That includes adjusted earnings before interest, tax, depreciation and amortisation (ebitda) of $1.72 billion to $1.78 billion, and adjusted net earnings between $330 million and $370 million.

The cut to capital spending came as the company completed significant multi-year programmes of investment, such as the XT mobile network and fibre-to-the-node, and looked to bring its capex-to-sales ratio closer to that if its international peers, Reynolds said.

The XT mobile network continued to grow, with more than one million customers on XT, representing around 51% of Telecom's total mobile base, and 77% of its mobile revenue.

Telecom's broadband base continued to grow with more than one million customers on the Telecom network, he said.

The company also today announced a third quarter dividend of 3.5c per share.



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