Telecom posts strong 2007 result

Net earnings lift 16.5% to $955 million

Telecom has posted earnings of $3,024 million for the year to June 2007, boosted by a one-off abnormal gain of $2,084 million from the sale of Yellow Pages.

Net earnings after tax was $955 million, up 16.5% from the $820 million posted for the same period in 2006.

The result was also boosted by a gain of $20 million from the sale of Telecom's 90% stake in Telecom Samoa Cellular.

Acting chief executive Simon Moutter said mobile revenue growth is now slowing, with "low single digit" revenue growth to be expected.

"In the quarter we saw revenue growth in both the consumer and wholesale broadband businesses," he says.

Moutter said Telecom's IT business Gen-I had performed strongly, with double-digit growth. Total IT revenue was $380 million, an increase of 9.8%. In the June quarter revenue was $116 million, an increase of 19.6%. Contracts including the Ministry of Justice and Westpac bolstered overall IT revenues.

New Zealand operating revenue was $4,300 million, an increase of 1.2%.

Higher New Zealand operating revenues for mobile, IT services and other operating revenue were partly offset by declines in interconnection, data and internet revenues.

Residential access lines dipped slightly by 0.8% to 1,403 million while national call revenue was $534 million, a decrease of 7.5%. International calling revenue was $380 million, an increase of 11.1%. Total calling revenue was $962 million, a dip of 0.6%

Interconnection revenue, which includes termination of calls on both fixed and mobile networks, declined 8.2% to $146 million. Telecom says the decline reflects the impact of lower mobile termination rates.

Total mobile revenues increased 5.4% to $816 million. Mobile voice revenues were down 0.8% to $522 million while data revenue increased 27.5% to $218 million. Total connections at 30 June 2007 were 1,977,000 compared with 1,703,000 a year before, the company says.

Total New Zealand broadband revenue was $274 million, up 3%.

Telecom's Australian business continues to decline, however. Operating revenues were A$1,150 million, a decrease of 3.5%. EBITDA was A$44 million, down 41.3%, while losses from operations was A$26 million, a reduction of 65.8%

Telecom will pay a fully imputed ordinary dividend for the quarter ended 30 June 2007 of 14.5 cents per share on 7 September 2007 in New Zealand and Australia, and on 14 September 2007 in the United States.

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