IT services a bright point in Telecom nine-month results

Calling revenue down, money from IT services and broadband up

Telecom’s earnings for the nine months to March 31 were down on last year’s result, but better than anticipated, CEO Paul Reynolds says.

Net earnings from continuing operations were $537 million, compared with $594 million for the same period last year.

In a media release announcing the results, Reynolds is quoted as saying “this decline is driven by an anticipated reduction in traditional services revenue”.

Counting New Zealand and Australia together, operating revenue for 2007-08 was slightly higher than for 2006-07, but expenses bought the after-tax, post-interest, depreciation and amortisation result down. In New Zealand, pre-tax and expenses operating revenue was down slightly.

Telecom’s capital spend for 2007-08 was 13% higher than for 2006-07.

In New Zealand, operating revenue was down 2.2%, totaling $3.138 billion. Broken into segments, most traditional telco services saw a decline, but good results from IT services offset declines in those areas to keep the overall result at the small 2.2% dip.

Local service revenue was down 1%, calling revenue was down 10%, interconnection revenue was down 8% and mobile revenues were down 2%.

Local service and calling revenue make up the lion’s share of Telecom’s revenues. In other areas which contribute less in numerical terms to the company’s total revenue, results were better.

Data revenue was up 0.9%, and broadband revenue was up 14.2%, but with very different results for the commercial and consumer sectors – commercial broadband revenue was down 24.1%, but was offset by an increase in consumer revenue of 24.5%.

Telecom Wholesale reported big gains, while revenue from dial-up connections, which is counted separately from broadband revenue, was down, reflecting the growth in broadband.

Revenue from IT services grew 13.6%, vindicating Telecom’s purchases of Gen-i and Computerland.

In Australia, operating revenue was up 10% and pre-tax and interest, depreciation and amortisation earnings were up 133%, but the overall result was a loss of $A34 million.

The results can be viewed in greater detail on Telecom’s website.

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