Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

TeamTalk bemoans subsidy to rivals, cuts annual guidance

TeamTalk bemoans subsidy to rivals, cuts annual earnings guidance on telco levy

Feb. 27 (BusinessDesk) - TeamTalk, which bought the rural telecommunications provider Farmside last year, has cut its annual earnings guidance, blaming the downgrade on the government-imposed levy to pay for servicing unprofitable customers in remote areas.

The Wellington-based company made a net profit of $1.7 million, or 7.2 cents per share, in the six months ended Dec. 31, from $5.4 million, or 23.3 cents, a year earlier. TeamTalk sales slipped 0.8 percent to $16.7 million from a year earlier.

Earnings before interest, tax, depreciation and amortisation were $5.1 million, including a $247,000 contribution from Farmside. TeamTalk now expects annual ebitda to fall short of last year's $8 million, which it previously expected to match. The company's shares fell 1.4 percent to $2.90 in trading today.

The downgrade comes after the company made a provision of $600,000 to cover the cost of the Telecommunications Development Levy - the replacement for old Telecommunications Service Obligation to cover the costs of non-commercially viable customers. TeamTalk now expects to fork out about $500,000 a year to cover the levy.

"The grandiose sounding Telecommunications Development Levy is in fact little more than a tax on the industry in order to subsidise the rural initiatives being undertaken by Vodafone and Chorus," TeamTalk said in a statement.

"We had initially thought that a number of niche services, such as is typically sold by our group, could be exempt from this levy, however it has recently been clarified that this is not the case," it said.

The company will also take a hit to its annual net profit due to one-off costs, including the amortisation of some intangible assets, from the Farmside acquisition.

TeamTalk is upbeat about the second half of the year, and still plans to pay annual dividends of 20 cents per share. The board declared an interim dividend of 10 cents, with a record date of April 19, payable on April 27.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Crown Accounts: Slightly Softer Growth Expected In PREFU

A slightly softer growth forecast is the main feature of largely unchanged Pre-election Fiscal Update compared to the Budget forecasts three months ago, Finance Minister Steven Joyce says. More>>

ALSO:

Water: Farming Leaders Pledge To Help Make Rivers Swimmable

In a first for the country, farming leaders have pledged to work together to help make New Zealand’s rivers swimmable for future generations. More>>

ALSO:

Unintended Consequences: Liquor Change For Grocery Stores On Tobacco Tax

Changes in the law made to enable grocery stores to continue holding liquor licences to sell alcohol despite increases in tobacco taxes will take effect on 15 September 2017. More>>

Back Again: Government Approves TPP11 Mandate

Trade Minister Todd McClay says New Zealand will be pushing for the minimal number of changes possible to the original TPP agreement, something that the remaining TPP11 countries have agreed on. More>>

ALSO:

By May 2018: Wider, Earlier Microbead Ban

The sale and manufacture of wash-off products containing plastic microbeads will be banned in New Zealand earlier than previously expected, Associate Environment Minister Scott Simpson announced today. More>>

ALSO: