Earnings before interest, tax, depreciation and amortisation (ebitda) for the period were $1.76 billion, down 0.2% on the previous corresponding period (pcp).
A fourth quarter dividend of 6c will be paid with no imputation credits.
"Telecom has halted the significant earnings decline of the previous two years and achieved notable improvements in the trajectory of each of its businesses," he said.
In a year of further recessionary and regulatory impacts, it was "especially pleasing" to have delivered strong growth in free cash flow of $126 million, or 28%, the first such growth since the regulatory shock of 2006.
"Our transformation and turnaround is on track."
Telecom's focus on managing costs had cut $249 million from the business during the year, with labour costs down around 3% in the fourth quarter, Dr Reynolds said.
Capital expenditure was reduced by $130 million compared with the previous period.
Adjusted revenue and other gains for the year fell by 6.3% to $5.3 billion, mainly reflecting continued competitive and price pressure in the legacy fixed line businesses, but operating expenses fell faster to $3.5 billion, a 9.1% decrease from the pcp.
Chorus, Gen-i and AAPT had each delivered ebitda growth for the year and a turnaround in the Telecom Retail business was on track for 2011, he said.
The XT mobile network continued to grow strongly during the fourth quarter, with 712,000 customer connections at June 30, up 20% on the previous quarter.
Total Gen-i mobile revenue was up 12% and the retail division's mobile broadband revenue was up 98% on the fourth quarter last year.
Fixed broadband retail growth was stable at around 10% in the June quarter, with Telecom Retail's market share steady at 56%.
Analysts were disappointed Dr Reynolds failed to provide any further details of the structural split proposal or how Telecom wanted to work with the Government on the ultra-fast broadband project.
Telecom had submitted a revised proposal that delivered the Government's "vision" through a package of co-investment, structural separation and integration of UFB with the rural broadband initiative, was the official response from Dr Reynolds.
"We look forward to engaging further with Crown Fibre Holdings and the Government on commercial, regulatory and legislation components of our proposal."
Telecom provided guidance of its future earnings based on the retention of Australian arm AAPT and not reflecting any impact from the Government's UFB project which was likely to reshape the industry.
The ebitda for 2011 was likely to be between $1.72 billion and $1.78 billion with adjusted net earnings of $300 million to $340 million.
Guidance for 2012 was ebitda to increase by $20 million to $80 million on 2011 with an effective tax rate of 25% to 28%.
The 2013 ebitda was likely to increase again by $20 million to $80 million, allowing for the same effective tax rate and capital expenditure of $750 million.
Forsyth Barr broker Tony Conroy said the result was broadly in line with expectations and would mean no changes to the broking firm's forecast.
The market appeared disappointed with the result as the shares fell 6c to $2.04 in afternoon trading.
