Sharechat Logo

TeamTalk cuts annual earnings guidance, reviews management structure

Friday 7th June 2013

Text too small?

TeamTalk, the owner of the CityLink fibre-optic broadband service, cut earnings guidance for a second time and is reviewing its management structure to try to bed in its Farmside Group acquisition.

The Wellington-based company expects second-half earnings before interest, tax depreciation and amortisation a "little lower" than $5.14 million, having previously flagged a "modest lift," it said in a statement. Net profit will be "knocked around a bit" as it brings the Farmside rural telecommunications business under its umbrella.

TeamTalk's board has decided to review its management structure and resource the company in line with its findings to help the transition into a larger group.

"A new management team usually takes some time to get up to speed, so we are expecting we'll have to slow down a bit until they get their teeth into the business fully," managing director David Ware said. "Gaps are appearing as the larger companies consolidate their businesses and we have lots of exciting opportunities to pursue."

The shares fell 1.2 percent to $1.15 today, and have shed 8.8 percent this year. The stock is rated a 'buy' by Forsyth Barr analyst Andrew Harvey-Green, who has a target price of $2.95, according to Reuters data.

TeamTalk cut its earnings guidance in February blaming the government-imposed Telecommunications Development Levy, which is used to fund services to unprofitable customers in remote areas.

The company said earnings at its Farmside unit have stalled at 2012 levels, and has faced higher costs to reposition it than expected. That means the result will miss the sales threshold for TeamTalk to pay an additional $7 million cash and $4.1 million in scrip in potential earn-outs.

TeamTalk bought Farmside for an upfront payment of $19 million in cash and $12 million in shares.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Telecom will offer CEO and senior managers performance equity grants to boost profits
Former Fonterra executive Alison Andrew appointed to head Transpower
MRP director Miller, CFO Meek go trawling for cheap shares
Rob Fyfe to leave Trilogy board, seeks new senior role in NZ
David Ross appears at District Court hearing, remanded until Aug.29
Crown drops charge against ex-SCF finance chief Graeme Brown
Postie Plus appoints No 1 Shoes executive Binns as new CEO
Pumpkin Patch CEO Neil Cowie resigns to take job with rival retailer
George Alexander Louis
Time to Move Before You Get Caught in the Meridian Watershed