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

Dynamic New Zealand writers to feature at this year’s Edinburgh International Book Festival

20 Jul 2017 Arts
Dynamic New Zealand writers making waves at home and abroad will present their work and participate in this year’s Edinburgh... more

$9.4m to support students with English as a second language

26 Jun 2017 Education
22 June 2017 Students learning English as a second language will benefit from a further $9.4 million being made available under... more

Business

Rocket launch a huge step for New Zealand’s space industry

25 May 2017 Business News
25 May 2017 Minister for Economic Development Simon Bridges has congratulated the team at Rocket Lab on the successful launch of... more

Increased investor confidence welcomed

29 May 2017 Business News
29 May 2017 Commerce and Consumer Affairs Minister Jacqui Dean today welcomed the Financial Markets Authority annual survey results... more

Living

NZ's Sola Rosa heading "Back to You" in London - interview with Andrew Spraggon

6 Jul 2017 Entertainment By Charlotte Everett
Sola Rosa Soundsystem heads back to London with a show on 27 July – NZNewsUK London Editor Charlotte Everett caught up with... more

Spirit of “Mateship” prominent at London ANZAC commemorations

25 Apr 2017 ANZAC By Charlotte Everett
All photos copyright Peter Livingstone Photography. Lead image: HRH The Duke of York (far right), with the Hon Alexander Downer (far... more

Property

New Zealand Housing Affordability Measure released

10 May 2017 Property
10 May 2017 The Ministry of Business, Innovation and Employment’s (MBIE) new Housing Affordability Measure will allow the market... more

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

Migration

Suspension of decision making authority

25 Apr 2017 Migration
24 April 2017Immigration Minister Michael Woodhouse is taking steps to improve Immigration New Zealand’s decision making... more

Recognised Seasonal Employers employ more Kiwis

8 Feb 2017 Migration
7 Feb 2017 Immigration Minister Michael Woodhouse welcomes a report showing the vast majority of employers who take on seasonal... more

Travel

International visitors projected to spend $15 billion

12 May 2017 Travel & Tourism
12 May 2017 New Zealand’s tourism sector is forecast to grow significantly over the next seven years, with international... more

Tourism spending continues rise in 2017

10 May 2017 Travel & Tourism
27 April 2017 Tourism spending by both international and domestic visitors continues to grow strongly in 2017, Acting Tourism Minister... more

Sport

SPECIAL LIMITED OFFER: Barbarians v NZ, Twickenham 4 Nov - £55 tickets, All Blacks Supporters Bay

20 Jul 2017 Rugby
In 2009 the Barbarian team had a phenomenal line up of world class players; Matt Giteau, Victor Matfield, George Smith, Jamie Roberts,... 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

Law Commissioner appointed

29 May 2017 Appointments
29 May 2017 Former Secretary for Justice Belinda Clark has been appointed as Law Commissioner, Justice Minister Amy Adams announced... more

Spencer to be Acting Governor of Reserve Bank

8 Feb 2017 Appointments
7 Feb 2017 Finance Minister Steven Joyce will appoint current Deputy Reserve Bank Governor Grant Spencer as the Acting Governor of... more

Recruitment

Online job ads continue growing strongly

26 Jun 2017 Recruitment
23 June 2017 Tertiary Education, Skills and Employment Minister Paul Goldsmith says the latest Jobs Online report shows strong growth... more

New employment resource for young people

1 Mar 2017 Recruitment
28 Feb 2017 Tertiary Education, Skills and Employment Minister Paul Goldsmith and Associate Education Minister Louise Upston have... more

s