Telecom Lifts Quarterly Earnings To $209 Million

16 November 1999

TELECOM LIFTS QUARTERLY EARNINGS TO $209 MILLION

Telecom today reported after-tax earnings of $209 million for the three months to 30 September 1999. Telecom will pay an 11.5 cents per share first quarter dividend.

Chief Executive Theresa Gattung said the main boosters to Telecom's performance in the first quarter were very strong growth in New Zealand's mobile phone market and increasing growth in data revenues.

Overview Result % change
Operating revenues $887 m + 2.1%
Operating expenses $522 m + 2.4%
Earnings before interest and tax $365 m + 1.7%
Net earnings $209 m + 1.5%
Adjusted net earnings # $216 m + 4.9%
Earnings per share 11.9c + 1.4%
Dividends per share 11.5c unchanged

# Adjusted for Southern Cross startup costs and AAPT holding costs

Ms Gattung said startup costs associated with the Southern Cross Cable across the Pacific and funding costs for Telecom's purchase of the initial 19.8 percent shareholding in Australian telecommunications company AAPT had reduced earnings by $7 million.

"Both of these projects are expected to add significant long-term value and net earnings adjusted for Southern Cross and AAPT would have been $216 million for the quarter, up 4.9%," Ms Gattung said.

The three months to 30 September had been the best ever period for signing up new mobile customers, with more than 83,000 new mobile connections.

Ms Gattung said the huge growth in New Zealand's mobile phone market, and the continued surge in XTRA customer numbers and usage reflected changes in the way New Zealanders were communicating with each other and with the rest of the world.

Volume Growth Y-o-Y % change, for period to 30 Sept
Cellular connections + 50.7% 760,800
Cellular call minutes + 38.3 % 240.3 m
Fixed line to cellular call minutes + 33.0% 129.8 m
XTRA customers + 61.2% 228,300
XTRA usage (per customer in Sept) + 79.6% 17.6 hours
ISDN lines + 60.2% 60,700
Telephone access lines + 1.5 % 1.88 m
National call minutes + 0.5% 506.8 m
International outward call minutes + 27.0 % 137.8 m
International inward call minutes + 16.4% 96.6 m

"National and international toll call prices continue to drop. This is great for Telecom customers and while it means lower revenues from these lines of business, growth in other parts of the business such as mobile and data is offsetting declines in voice calling revenues," Ms Gattung said.

Data revenues now exceeded international calling revenues because increasing numbers of New Zealand businesses were going online and because New Zealanders had almost doubled the amount of time they spent emailing and web-surfing.

ENDS

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