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Telecom Reports $205Million Third Quarter Earnings

Telecom today reported after-tax earnings of $205 million for the three months to 31 March 2000 and $611 million for the nine months to 31 March 2000. Telecom will pay an 11.5 cents per share third quarter dividend.

"Net earnings excluding AAPT and abnormal items in the comparative period, increased 1.8% to $222 million for the quarter and increased 2.9% to $644 for the nine month period," Telecom Chief Executive Theresa Gattung said.

Ms Gattung said third quarter reported earnings decreased 8.5% because of the $17 million net impact on earnings of, interest costs, goodwill amortisation and profits associated with Telecom's investment in AAPT and because the comparable period was inflated by $6 million of abnormal items.

"Consolidation of AAPT reduced reported earnings, which is what we expected. We believe Telecom's investment in AAPT will make a positive contribution to the group's earnings in two or three years. AAPT is making good progress, with revenue up 28.6% for the quarter and earnings before interest, tax, depreciation and amortisation up 40.9%," Ms Gattung said.

"Telecom's investment in AAPT is an investment in a strong growth business that fits well with our trans-Tasman strategies," she said.

"Third quarter revenue was $921 million excluding AAPT, up 4.7% from the corresponding period, as our customers spent more time web surfing, emailing, and talking on their mobile and fixed phones," Ms Gattung said.

"International calling prices for the quarter have fallen 31.1% from the corresponding period to an average of 32 cents a minute and national calling prices have fallen 15.9% to an average of 14 cents per minute. This is great for our customers and has boosted international calling volumes 32.5% and national calling volumes 3.9% for the quarter," Ms Gattung said.

"The whole market is booming. Statistics New Zealand found that the communications sector grew 16.5% in calendar 1999," she said.

Telecom's Internet Service Provider, Xtra, had 268,100 customers, up 48.7% from a year ago, and Xtra's customers had more than doubled their monthly usage to an average of 21.4 hours online each in March.

"It is particularly pleasing that independent surveys by A.C. Nielsen confirmed that Xtra is New Zealand's leading Internet Service Provider and Internet portal," Ms Gattung said. A.C. Nielsen found that Xtra is the most popular web site visited by New Zealanders web surfing from home, with more visits by these web surfers than any international site, outranking even Yahoo! and AOL.

"There are about 535,000 residential Internet accounts in New Zealand and 41% of people with these accounts visited Xtra in March," Ms Gattung said.

"Almost three out of eight people now have a mobile phone," Ms Gattung said.

Telecom had 921,600 mobile customers, up 51.4% from a year ago. More and more New Zealanders had embraced the convenience of being mobile and 37% of the population had mobile phones.


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