Telecom feels impact of FY13 strategic shift

Telecom feels impact of FY13 strategic shift

Reports $238m revenues alongside slips in EBITDA and revenues

Telecommunications provider, Telecom NZ, has reported net earnings after tax of $238 million for its 2013 financial year (ended June 30), although felt losses as a result of key business remodelling decisions.

Having earned total revenues of $4.19 billion, the telco registered operating costs at $3.27 billion, leaving its earnings before interest, taxes, depreciation, and amortisation (EBITDA) at $922 million.

After adjustments for one-off items, including restructuring costs and asset impairments of $127 million, EBITDA is calculated at $1.04 million, a 0.5 per cent decrease from the previous year.

Adjusted operating revenues and other gains declined 8.1 per cent to $4.17 billion, which is attributed to a decline in fixed line revenues.

Telecom claims the result reflects the early impact of the major strategic shift underway across the group. During the 2013 financial year, the telco began its change from traditional fixed and mobile infrastructure company to what it calls a “future-oriented competitive provider” of communication, entertainment and IT services delivered over its networks and the Cloud.

According to Telecom chairman, Mark Verbiest, the company’s key goals were to grow share in the mobile market, hold share in the broadband market, refocus the Gen-i business services portfolio, and reduce operational costs.

“We were conscious these decisions would likely have a negative impact on short-term operating revenues and margins and incur a substantial restricting charge,” Verbiest said. “However, we believe they have enhanced Telecom’s position for the longer term by strengthening our customer base and improving our cost competitiveness.

Looking forward, Telecom chief executive officer, Simon Moutter, said the telco is “realistic about the performance improvements that must be achieved.”

In addition to pursuing goals outlined by Verbiest, Moutter said Telecom will “retain a disciplined approach to capital management and will continue to reduce variable costs and simplify the business.”

“This will involve a significant re-engineering program aimed at rationalising our internal IT infrastructure, and a centrally led program looking across the business at simplification opportunities.”

Telecom directors have declared a second half dividend $0.08 per share with 75 per cent imputation, bringing total dividend for the year to $0.16 per share. Telecom said it intends paying a $0.16 per share dividend in the 2014 financial year.

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