Telecom Trading Update – Q3 FY2010/11

Telecom Trading Update – Q3 FY2010/11

Telecom has today released its trading update for the quarter ended 31 March 2011.

The trading update provides analysts and investors with certain non-financial key performance indicators for the quarter. Telecom’s full year results, including financial performance, will be disclosed on 19 August 2011.

“A continued strong focus on operational excellence and cost control means we remain on track to deliver our full year earnings guidance and indeed we have improved the Group Capex outlook,” said Telecom CEO Paul Reynolds.

“We now expect full year Capex to be within the $900m to $930m range for the FY11 financial year, down from the $950m to $1.0bn indicated previously. In addition, we have also introduced Capex guidance for FY12, indicating that Capex for that period will be no more than $750m. Guidance for FY13 has been withdrawn.

“This reduction comes as we complete significant multi-year programmes of investment, such as the XT mobile network and fibre-to-the-node, and look to bring our Capex-to-sales ratio closer to that of our international peers.

“We will drive more efficient investment through avoiding duplication and waste, along with ensuring investment delivers products and services that New Zealanders want as well as generating appropriate returns.

“The XT mobile network continues to grow strongly and we now have over one million customers on XT, representing around 51% of our total mobile base, and 77% of our mobile revenue.

“The Access base remains steady with relatively low levels of fixed to mobile substitution by international standards, and Telecom’s broadband base continues to grow with more than one million customers on the Telecom network,” said Dr Reynolds.

Telecom New Zealand has also today announced a Q3 dividend of 3.5c per share, with full imputation. The Dividend Reinvestment Plan (DRP) and on-market buy back have been suspended due to the current status of UFB negotiations.

GUIDANCE

Financial guidance does not reflect any impact from the Government’s Ultra-fast Broadband initiative, which is likely to reshape the industry.

• FY11 Guidance
• Adjusted EBITDA of $1.72bn to $1.78bn
• Depreciation and amortisation of $1.00bn to $1.06bn
• Effective tax rate of around 33%
• Adjusted Net Earnings of $330m to $370m
• Capex of $900m to $930m (previously $950m to $1.0bn)

• FY12 Guidance
• Adjusted EBITDA to increase by $20m to $80m
• Effective tax rate of 25% to 28%
• Capex of no more than $750m

• FY 13 Guidance
• FY13 Guidance has been withdrawn reflecting the announcement to deliver the FY13 Capex target one year early and UFB uncertainty

© Scoop Media