Telecom reports half-year earnings fall

Focus moves from separation to business, says CEO

Telecom has reported half-year net earnings of $397 million for the second half of 2007, down from $454 million in the same period of 2006.

Between the two periods, Telecom sold its Yellow Pages Group and bought Australian telco Powertel.

Adjusted net earnings from continuing operations for the half year were $397 million, compared with $408 million for the half in 2006, a decrease of 2.7%.

CEO Paul Reynolds says the company's focus is now moving away from the operational separation process, which he says is nearing completion, and on to business fundamentals, including increased focus on customer service.

Group operating revenue was up from $2,796 million on 2006 to $2,827 million. Operating revenue in New Zealand was down 2.9%, however, to $2,095 million.

Reynolds says ICT services company Gen-i and the wholesale business performed well during the period, citing Gen-i contract wins at ACC and the Ministry of Social Development.

"A transformation is under way," he says. "We have made decisions about leadership, structure and focus that will help to secure future momentum for Telecom New Zealand, based on a relentless focus on our customers. The achievement of regulatory clarity has helped to reinforce this focus."

Telecom is on track for "Separation Day" on 31 March 2008, he says.

While Telecom had 90,000 mobile connections in the quarter, revenue was weaker, Reynolds says.

"We have the opportunity to increase our share of high-value customers and roaming revenues over time, once our WCDMA mobile network is deployed before the end of this year, and as we bring sophisticated new worldmode mobile devices to market, including Blackberry, and Windows Mobile 6 PDA devices," he says.

Retail broadband connections were down due to aggressive competition in the consumer market, he says.

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