Telecom failed to excite the market yesterday with its
June-year profit announcement, but it did give investors
certainty the 16c-per-share dividend would remain in place for
at least another two years.
The telecommunications company, which includes Gen-i,
reported operating earnings of $922 million for the year,
adjusted up to $1.04 billion, which was down slightly on the
2012 adjusted earnings.
Reported net earnings were $238 million, adjusted to $342
million, up nearly 22% on the previous corresponding period.
Adjusted earnings per share were 18c, up 20% from 2012. A
final dividend of 8c took total dividend to 16c.
Craigs Investment Partners broker Chris Timms said it was
difficult for a company to surprise on the upside because of
continuous disclosure rules.
However, he was heartened by the fact the dividend policy was
''The profit was stronger than we expected due to a dividend
from Southern Cross being higher than estimated.''
Telecom had provided positive signs, with its customer base
in mobile growing by 92,000 in the second half of the year to
reach 1.8 million total mobile customers.
Telecom held market share in the competitive broadband market
with 630,000 subscribers at the end of the period, up from
599,000 at the same time last year.
There was no guidance given but Mr Timms expected 2014
earnings to be about $1 billion.
''The market is reasonably positive on the basis of the
dividend. There were no new initiatives announced, just a
restatement of its strategy. It is a good solid result,'' he
Telecom chairman Mark Verbiest said in a briefing the company
had made some deliberate calls through the year: to grow its
share of the mobile market; hold its share in broadband;
refocus the Gen-i business services portfolio; and
significantly reduce operating costs.
''We were conscious these decisions would likely have a
negative impact on short-term operating revenues and margins
and incur a substantial restructuring charge.
''However, we believe they have enhanced Telecom's position
for the longer term by strengthening our customer base and
improving our cost competitiveness.''
Chief executive Simon Moutter said the company was charting
its new course in light of explosive growth in demand for
data and mobility services, unprecedented change in the New
Zealand industry structure and the need to sort out complex
business platforms, legacy products and high operating costs.
Although financial performance was weaker, there were
encouraging signs of growth and stability in the customer
Gen-i's financial performance reflected intense price-based
competition and significant portfolio changes to develop a
stronger market proposition, he said.
In his outlook, Mr Moutter said while good progress had been
made, especially with costs, Telecom was realistic about the
performance improvements that must be achieved.
The market continued to evolve and Telecom's business must
continue to change at pace.
In particular, it would target a leading position in the
mobile market, ensuring it was cost competitive and improving
the relevance of its marketing, especially in key segments
such as young urban customers, he said.