Telecom on track for second-half target
Fri, 08 Jun 2012 10:54a.m.
Telecom, New Zealand's biggest listed company, says cost cutting and lower borrowing costs have helped keep earnings on track even as competitors chase market share.
It says second-half earnings before interest, tax, depreciation and amortisation (Ebitda) would be about $560 million, meeting the guidance it gave with its first-half results in February.
Net profit in the second half would be "near the top end" of its $160m-to-$190m forecast, it said in a statement.
The statement comes after Telstra this week said it is in talks about the possible sale of its TelstraClear unit in New Zealand to Vodafone, already Telecom's biggest rival in the mobile market.
A merger would create a more powerful rival for Telecom with fibre networks in major cities.
"Competitors have been very active with a variety of new offers, which has increased customer churn," Telecom acting chief executive Chris Quin.
"Despite increased competition, our focus on reducing costs sees us on track to deliver Ebitda guidance as planned."
Among cost-cutting measures, the company will delist its American depositary receipts from the New York Stock Exchange, effective July 19.
The ADRs amount to 15 per cent of Telecom's listed shares and will be able to be traded on the over-the-counter market starting on July 10.
"We are leaving no stone unturned in our drive to reduce costs and complexity, and delisting from the NYSE is a logical step in this process," chief financial officer Nick Olson said.
Telecom's financing costs are lower than expected, which Mr Olson said reflected additional finance lease income following the Chorus demerger in November.
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