Telecom has reported a huge drop in net earnings to $166 million, a 56.5 percent decrease compared to last year, when earnings were $382 million.
Telecom has written off $257 million in assets relating to its fixed line copper network and its operational separation undertakings.
A note the financial statements reads: "Given the longer-term move to a fibre-based national infrastructure and regulatory developments, $257 million of copper-based and Wholesale FMO regulatory assets were impaired at 30 June 2011 and were therefore written off. The planned changes in terms of the regulatory and operating environment on both Telecom and other demerged businesses may result in further asset impairments, to be recognised in future periods, or the shortening of asset lives, irrespective of whether Telecom demerges or not."
In addition, the Canterbury earthquakes cost the telco $42 million, with the cost of preparing for the Ultra Fast Broadband and demerger put at $29 million.
In the past financial year gained $18 million on the sale of AAPT consumer to iiNet in Australia, $5 million on the sale of Yahoo!Xtra Limited in April and $22 million "relating to a resolution and dispute settlement reached with a supplier".
Despite a drop in net earnings, Telecom has announced an EBITDA of $1.8 billion, an increase of 2.1 percent on the previous year, which appears to have been achieved through cost savings. Full-year adjusted revenue was $5.1 billion (3.2 percent down on last year) and adjusted expenses at $3.3 billion — down by 5.8 percent.
In a media statement Telecom CEO Paul Reynolds says the results represent “a strong operating performance in an increasingly competitive environment.”
This is likely to be the final full-year earnings for Telecom, as it intends to demerge Chorus later this year in order to comply with its contract with Crown Fibre Holdings to deliver 70 percent of the UFB.