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XT network boosts Telecom, other revenue lines down

Friday November 6, 03:37 PM

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Telecom's first quarter revenues received a boost from the new XT mobile network, but not enough to counter falls in most other revenue lines.

The company today reported a 6.5 percent, or $95 million, fall in revenue for the three months to the end of September, compared to a year earlier, to $1.36 billion. Operating expenses fell 7.7 percent to $909m.

Net earnings rose 9 percent to $163m, due in part to a $43m, one-off effect from changes in tax law.

Mobile revenues for the quarter were up 2.4 percent to $212m, with Telecom saying the growth followed the launch of the XT network in late May.

Calling revenues fell 17.2 percent to $264m, from $319m a year earlier. The fall was due to rationalisation of the international carrier services customer base and a cut in the number of access lines, Telecom said.

Depreciation and amortisation costs rose $37m in the quarter, due mainly to the company's higher asset base, particularly for the XT network.

The launch of the XT network and a continued focus on improving customer service levels saw total mobile connections rise 2 percent in the quarter, Telecom said.

At the end of September, 10.8 percent or 242,000 of the total mobile connections were on the XT network.

Telecom chief executive Paul Reynolds said XT customers were using their mobile services more, with an increase of 16 percent in average revenue per user on like for like customers.

Telecom said it was maintaining its full year guidance for adjusted ebitda to range between a 1 percent fall and a 2 percent rise compared to the previous year, subject to potential economic risks.

Earnings before interest, tax, depreciation and amortisation (ebitda) guidance for the 2011 to 2013 financial years had been maintained, but Dr Reynolds said that was subject to potential regulatory risks arising from proposals on ultra fast broadband, rural broadband and Telecommunications Service Obligations.

The company's largest business unit, Retail, which provides mass market products and services, had a 2.9 percent fall in first quarter revenue to $527m. Its ebitda fell 15 percent to $91m.

Increases in broadband and mobile revenues for Retail were more than offset by falls in local service and calling revenues, Telecom said.

Mobile revenues in the Retail unit were up 3.4 percent or $5m to $152m, driven by the launch of XT.

Specifically, mobile handset revenue was up significantly due to customers switching to the network, coupled with the sale of a greater proportion of higher specified and higher value mobile devices, Telecom said.

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