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Telecom Nine Month Earnings Grow 11.5 Per Cent

11 May 2001
Telecom Nine Month Earnings Grow 11.5 Per Cent

Telecom achieved net earnings of NZ$681 million for the nine months ended 31 March 2001, an increase of 11.5 per cent from the corresponding period last year.

Chief Executive Theresa Gattung said Telecom was making solid progress with its transformation as an Australasian group while also securing the benefits of its highly successful Southern Cross Cable project.

Total revenues for the nine months increased to NZ$4,279 million, reflecting growth in both Australian and New Zealand businesses and initial dividend income of NZ$245 million from Southern Cross.

Ms Gattung said Telecom looked forward to continuation of revenue from this network investment over future years.

"Telecom is in great shape to develop its regional presence, building on current achievements in Southern Cross and AAPT, and on business alliances on both sides of the Tasman," Ms Gattung said.

For the quarter ended 31 March 2001, total revenues grew 29.6 per cent to NZ$1,606 million from the corresponding period last year. Net earnings were up 85.9 per cent to NZ$381 million.

"Telecom remains strongly focused on business growth while having real success in containing costs of operation," Ms Gattung said. Expenses in Telecom’s New Zealand businesses declined 0.2 per cent for the quarter compared with the corresponding period last year.

31 March 2001 31 March 2000
Nine months Q3 Nine months Q3
Group revenues $4,279 M $1,606 M $3,119 M* $1,239 M
Group EBITDA $1,789 M $779 M $1,559 M* $552 M
Group net earnings $681 M $381 M $611 M* $205 M
Third quarter dividend (per share) 5 cents 11.5 cents
* Figures include 4 months only of AAPT and no TCNZA

Dividend

Telecom will pay a fully imputed dividend for the third quarter of 2000-01 of 5 cents per share, unchanged from the previous two quarters. The dividend will be paid in New Zealand and Australia on 15 June 2001 and in New York on 22 June 2001. (A 3 per cent discount to current market price will apply to shares issued under the dividend reinvestment scheme).

Revenues

In New Zealand revenue growth reflected the Southern Cross dividend, along with gains in some of Telecom’s calling businesses and data and Internet services. Data revenues grew 11.7 per cent for the quarter ended 31 March 2001, based largely on growth in IP network-based products including fast Internet access on ADSL. In Australia, data revenues were up 59.3 per cent for the quarter due to expansion in AAPT’s data network services and the establishment of TCNZA’s Commonwealth Bank of Australia contract in September 2000.

Internet revenues in New Zealand increased 18.8 per cent for the quarter, based on sustained growth in customers and usage. The Group’s connect.com.au Internet and e-commerce business in Australia increased revenue 53.3 per cent for the quarter.

Telecom’s total calling revenues were higher for the quarter, encompassing growth in New Zealand-based international revenues, Australian national calling revenues, and increased revenues from calls to cellular networks in both countries.

Mobile Business

Ms Gattung said Telecom’s mobile business was making solid progress in New Zealand where revenues were up 0.7 per cent for the quarter ended 31 March 2001. Net connection growth for the three months was 118,000, lifting the total number of customers to 1,269,000.

"It has been another strong quarter, with good connection growth and stable margins in the lead up to the launch of our new CDMA network," Ms Gattung said.

CDMA is on track for commercial launch in New Zealand mid year, and, in preparation, Telecom has established Australian roaming facilities for customers.

The Group’s Australian mobile service reseller business achieved 15.8 per cent revenue growth for the quarter, with total customers rising to 241,000 at 31 March 2001.

Operating Expenses

Ms Gattung said Telecom was sharply focused on management of operating expenses in the core business and this focus was reflected in results for the quarter ended 31 March 2001. New Zealand expenses were down 0.2 per cent and for the nine months, expense growth slowed to 4.8 per cent. In Australia, expense growth of 48.2 per cent for the quarter was due to growth in revenues especially AAPT’s offer of Smartchat telephony services.

Total personnel costs for the quarter declined 12.7 per cent, largely due to Telecom’s sale of the ConnecTel network maintenance business in June 2000. Total personnel in the Group was 7,394 at 31 March 2001, including 2,041 in Australia.

Australian Expansion

Ms Gattung confirmed Telecom’s commitment to pursuing selected growth opportunities in Australia. "Integration of the AAPT businesses into the Telecom Group is well advanced and the growth momentum in those businesses has been maintained.

"We are drawing on the wealth of skill and experience built up in New Zealand, and combining that with the drive and ambition that reflects our position as a new entrant in Australia," she said.

ENDS

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