Telecom has revised its financial guidance and stated its willingness to work with the government on its fibre rollout.
The news follows an announcement on the NZX this morning about a trading halt on Telecom's shares. The NZX announcement read: “NZX Regulation advises that, at the request of the company, it has placed a trading halt on Telecom Corporation of New Zealand Limited Ordinary Shares (TEL) pending a material announcement by the company.”
In a media release issued shortly before 2pm Telecom announced changes to its FY11 to FY13 financial guidance, which takes into account a reduction in capital expenditure in FY10 and FY11. The new guidance figures in dollar terms are:
FY11 – EBITDA $1.720 billion to $1.780 billion (down from $1.820 billion to $1.855 billion), CAPEX $1.0to $1.1 billion
FY12 – EBITDA + $20 million to +$80 million (down from +$70 million to +$110 million)
FY13 – EBITDA +$20 million to +$80 million (down from +$75 million to +$115 million), CAPEX around $0.75billion
The revised forecast is in part due to the TSO/Rural Broadband Initiative decision that was finalised by the government in March and which will make the (roughly) $70 million TSO fund contestable, rather be allocated exclusively to Telecom.
In addition, Telecom expects “a softening revenue outlook” due to lower mobile revenue growth, price pressures in voice and data markets and flow on impacts of the economic downturn. It has restated it will pursue “management initiatives to drive harder on cost out programmes outlined in May 2009.”
In the release the following statement is attributed to Telecom CEO Paul Reynolds regarding the government’s Ultra Fast Broadband plan: “We are highly focused on how we position Telecom for a UFB world, and the implications for this on Telecom’s regulatory undertakings which are designed for a copper, not fibre world. We are open to working with the government on a full range of approaches to its UFB initiative. Our focus is on delivering the best result for Telecom shareholders and New Zealanders.”
Speculation was rife this morning that the company may announce the sale of its Australian division AAPT. However the press release makes clear that the financial guidance “assumes retention of AAPT”.
It’s understood that Telecom’s executive management team has met today.
An hour before this mornings NZX statement the Commerce Commissionpublished its summary and analysis of Telecom’s first regulatory financial statementsfor the year ending 30 June 2009.
In the release TelecommunicationsCommissioner Ross Patterson queried some of financial reporting.
“The initial regulatory financial statements have raised issues about themethodologies used in the preparation of this information. The Commissionhas always regarded the first year of regulatory reporting as a transition yearand has highlighted areas where a re-working of the reporting requirements,particularly in relation to the attribution of income and expenses andvaluation of Telecom’s fixed assets, is likely to be necessary,” said DrPatterson.
Telecom will host an investor/media call at 4pm.
