Telecom reports $197m Q2 profit

Telecom today reported after-tax earnings of $197 million for the three months to 31 December 1999 and $406 million for the half year to 31 December 1999.

Telecom today reported after-tax earnings of $197 million for the three months to 31 December 1999 and $406 million for the half year to 31 December 1999.

The company will pay an 11.5 cents per share second quarter dividend.

Chairman Roderick Deane said this morning that Telecom was well into a new era "where the Internet is part of everyday life, mobile phones are commonplace and phone, Internet, entertainment and computer companies are forming alliances to offer new services to customers.

"The trends seen world-wide are now sweeping through New Zealand and Australia," Deane said. "We face a challenge balancing between the need for change and progress in the online world while still meeting the needs of customers in our traditional voice calling business."

CEO Theresa Gattung said the such changes were reflected in the strong growth Telecom experienced in its cellular, data and Internet businesses.

"Xtra customers are spending almost twice as long online as they did a year ago and it is a profitable business. Xtra's revenue growth was 78% in the second quarter," Gattung said. "That is quite remarkable, because four years ago that business didn't even exist."

Xtra's customers are now spending, on average, 18 hours a month online and the ISP carries about 2.6 million emails every day.

"Telecom had its best ever quarter for new cellular connections and our third consecutive quarter of record cellular growth. One in three New Zealanders now have a cellphone," Gattung said.

"And there is still plenty of room to grow. In some European countries, two out of three people have cellphones and forecasters believe there will eventually be more cellphones than people," she said.

She said the rapid growth in cellphone usage had affected local fixed-line calling.

"Local service revenue was flat, despite an increase in enhanced services and access lines largely because of substitution of cellular calls for local calls. People are choosing to pay a little more than local call prices in return for the convenience of being mobile."

Gattung also hailed " continued strong competition" in Telecom's traditional voice calling business - in the distance calling market, anyway.

"New Zealand's international call prices are now among the lowest anywhere in the world and national call prices are below the OECD average," she said. "Average international call prices out of New Zealand are now 16.3% lower than a year ago, while national call prices are almost 20% lower."

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