Q3 for Telecom NZ to be better than expected

Forecast optimistic despite lagging profits

Telecom Corporation of New Zealand (ASX: TEL) will have a better than expected Q3, despite falling profits and revenue.

The company said its Q3 earnings from New Zealand proved to be slightly higher than predicted, and the mergers of AAPT and PowerTel have helped increase EBITDA in Australia.

But at NZ$140 million (AUD$111 million), earnings for the 2008 March quarter were still well below the NZ$239 million (AUD$190 million) the company earned in the same quarter last year.

Telecom NZ has also experienced a drop in operating revenue by around two percent to around NZ$3.3 billion

The sinking profits have been caused by a decline in traditional revenue, such as a 10 percent drop in local call revenue.

But these declines have been somewhat offset by gains such as a 10 percent increase in Australian profits and a 22 percent increase in revenue from IT services.

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