Mobile Performs Well for Telecom New Zealand but All Divisions Stall

The result was in line with expectations. The top line was soft as revenue fell 8.5% to NZD 2.1 billion. Revenue declined across all business units, with IT managed services division Gen-i and AAPT in Australia the most disappointing. Decline in voice and data volumes, pricing and customers leaving the network saw revenues decline 4.5% and 30% respectively for the two divisions. On a product basis, mobile performed well and fixed-broadband was in line. Fixed-voice service continues to be hampered by mobile substitution, but we expect the decline in revenue to slow. At a group level, earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 3.7% to NZD 506 million as operating costs declined at a faster pace on lower headcount and labour costs. The strong net profit growth of 57% to NZD 156 million is attributable to lower depreciation and interest costs post the demerger of Chorus. An interim dividend of AUD 0.08 per share was declared, imputed at 75%.