Wellington - AFP
Telecom Corp., New Zealand\'s largest telecommunications firm, announced a 56.5 percent slump in full-year net profit Friday after a series of writedowns and one-off charges hit the bottom line. Telecom said net profit for the 12 months to June was NZ$166 million (US$136 million), down from NZ$382 million a year earlier. The company said one-off costs included NZ$42 million from February\'s Christchurch earthquake, NZ$29 million to demerge its network and retail arms and a NZ$257 million writedown on the value of its copper wire network. Stripping out the abnormal items, Telecom\'s annual profit rose 1.6 percent to NZ$388 million, while group revenue slipped 3.2 percent to NZ$5.1 billion. \"These results represent a strong operating performance in an increasingly competitive environment,\" chief executive Paul Reynolds said. The writedown of Telecom\'s copper wire network comes after the government finalised plans for a NZ$3.0 billion fibre optic broadband network, which will render the old technology largely obsolete. The government has granted Telecom contracts for about 70 percent of the planned broadband network, but on the condition that it separate its network and retail arms to dilute its dominance of the New Zealand market. As a result, its network arm, Chorus, will become a separately listed company by the end of 2011, concentrating on building the network and supplying wholesale broadband to other companies that sell their services direct to the public. Telecom will continue as a retail-focused business, selling fixed-line, mobile and broadband services to the public. The company said the imminent demerger meant it could not provide market guidance for the current fiscal year. Telecom shares rose 1.7 percent to NZ$2.65 after the announcement, outperforming an overall market down 1.3 percent.