Telecom affirms 2H guidance on cost cutting, cheaper finance   8 Jun 2012

Telecom, the biggest company on the NZX 50 Index, affirmed its second-half guidance, saying cost cutting and lower borrowing costs have helped keep earnings on track even as competitors chased market share.

Second-half earnings before interest, tax, depreciation and amortisation would be about $560 million, meeting the guidance it gave with its first-half results in February. Net profit in the second half would be “near the top end” of its $160 million-to-$190 million forecast, it said in a statement.

Today’s statement comes after Telstra this week said it is in talks about the possible sale of its TelstraClear unit in New Zealand to Vodafone, already Telecom’s biggest rival in the mobile market. A merger would create a more powerful rival for Telecom with fibre networks in major cities.

"Competitors have been very active with a variety of new offers, which has increased customer churn," Telecom acting chief executive Chris Quin. “Despite increased competition, our focus on reducing costs sees us on track to deliver EBITDA guidance as planned."

Among cost cutting measures, the company will delist its American depositary receipts from the New York Stock Exchange, effective July 19. The ADRs amount to 15 percent of Telecom’s listed shares and will be able to be traded on the over-the-counter market starting on July 10.

“We are leaving no stone unturned in our drive to reduce costs and complexity, and delisting from the NYSE is a logical step in this process,” chief financial officer Nick Olson said.

Telecom’s financing costs are lower than expected, which Olson said reflected additional finance lease income following the Chorus demerger in November. Capital expenditure in the second half would be near the top end of the company’s forecast range of $190 million to $220 million.

Shares of Telecom last traded at $2.50 and have slipped from $2.75 on May 10. The stock is rated a ‘hold’ based on a Reuters survey of 10 analysts, with a price target of $2.33.

Quin said Telecom has responded to rivals’ offers by increasing data caps on its broadband plans. In mobile “we are seeing continuing decline in our prepaid customer base prior to the expected shutdown of the CDMA network in July this year,” he said.

(BusinessDesk)

Add a comment

Bookmark and Share

News

Pharmac increases access to new treatments

5 Dec 2016 Health
Jonathan Coleman 5 December, 2016 Pharmac increases access to new treatments Health Minister Jonathan Coleman we... more

Prime Minister John Key announces resignation

5 Dec 2016 Ministerial Speeches
Rt Hon. John Key 5 December, 2016 Just a few days ago I marked the anniversary of my eighth year as Prime Minister and my... more

Business

Treasury forecasts solid growth, stable finances

8 Dec 2016 Business News
8 December, 2016 Treasury forecasts solid growth, stable finances Treasury’s latest forecasts show the Government... more

Key crowns APEC summit with China free-trade upgrade

21 Nov 2016 Business News By Pattrick Smellie
Article - BusinessDesk Monday 21 November 2016 08:50 AM Key crowns APEC summit with China free-trade upgrade By Pattrick Smellie in ... more

Living

3rd Position, Louis Vuitton America’s Cup World Series

21 Nov 2016 Lifestyle
Emirates Team New Zealand EMIRATES TEAM NEW ZEALAND CLOSES IN 3rd POSITION THE LOUIS VUITTON AMERICA’S CUP WORLD SERIES more

Arts Foundation Award recipients for 2016

14 Nov 2016 Lifestyle
The Arts Foundation Next generation of internationally acclaimed talent among the Arts Foundation Award recipients for 2016Under ... more

Property

NZ house prices gain 11% in October

14 Nov 2016 Property
Article - BusinessDesk Monday 14 November 2016 10:28 AM NZ house prices gain 11% in October, driven by sales of higher value homes By... more

RBNZ sees pressures building in Auckland construction sector

11 Nov 2016 Property By Paul McBeth
Article - BusinessDesk Thursday 10 November 2016 04:04 PM RBNZ sees pressures building in Auckland construction sector By Paul ... more

Migration

Good progress on investment attraction strategy

8 Dec 2016 Migration
Economic Development Minister Steven Joyce has welcomed news that New Zealand is attracting a higher level of quality international... more

Changes to Financial Markets Conduct Act impact UK pension transfers

1 Nov 2016 Migration
New Zealand Government Hon Paul GoldsmithMinister of Commerce and Consumer Affairs 1 November 2016 Changes to Financial Markets... more

Travel

Work on $700m Puhoi road underway

8 Dec 2016 Travel & Tourism
Hon. Simon Bridges 8 December, 2016 Prime Minister John Key and Transport Minister Simon Bridges have turned the sod on th... more

Air NZ teams up Ronan Keating, Julian Dennison for Christmas song

2 Dec 2016 Travel & Tourism
Air New Zealand has paired up with singer Ronan Keating and rising Kiwi actor Julian Dennison to rejig a Christmas classic. 'Summer... more

Sport

BLACKCAPS lose Chappell-Hadlee trophy

8 Dec 2016 Cricket
BLACKCAPS lose Chappell-Hadlee trophy Posted Tuesday, 6 December, 2016 

more

Columns

Gordon Campbell on the Gareth Morgan crusade

11 Nov 2016 Opinion
Column - Gordon Campbell   Gordon Campbell on the Gareth Morgan crusade First published on Werewolf more

Gordon Campbell on the US election outcome

10 Nov 2016 Opinion
Column - Gordon Campbell   Gordon Campbell on the US election outcome more

Kiwi Success

High Commissioner to India announced

8 Dec 2016 Appointments
Hon. Murray McCully 7 December, 2016 High Commissioner to India announced Foreign Minister Murray McCully today... more

Acting District Court Judge appointed

11 Nov 2016 Appointments
New Zealand Government Hon Christopher FinlaysonAttorney-General 11 November 2016 Acting District Court Judge appointed Wellington... more

Recruitment

NZ Government accepts recommendations on pay equity

8 Dec 2016 Recruitment
Hon. Paula Bennett,  Hon. Michael Woodhouse, Hon. Louise Upston 24 November, 2016 The Government will update the Equa... more

Fisher Funds hunts for new head to replace founder

2 Nov 2016 Recruitment
Article - BusinessDesk Tuesday 01 November 2016 04:42 PM Fisher Funds hunts for new head to replace founder Carmel Fisher By Paul ... more

s