Telecom reported a 59 percent fall in first half net profit to $162 million, while chief executive Paul Reynolds said good progress had been made in a slowing economy.
The company reported today adjusted earnings before interest, taxation depreciation and amortisation (ebitda) of $884 million for the six months to the end of December.
That was within guidance and a 5.5 percent decline on the equivalent half in the prior year, Telecom said.
When the one-off impact of $101m of impairment charges was included, the ebitda of $783m was a decline of 16 percent on the first half of the prior year.
The $101m of impairment charges included the previously announced impairment of $33m of GSM mobile equipment, relating to the decision to upgrade to W850 mobile technology, and a $68m write-off of goodwill relating to PowerTel, as its carrying value was no longer supported by forecast earnings.
Dr Reynolds said the company's new management team had delivered strong operating metrics in the focus areas of broadband, mobile and ICT.
Revenue -- which increased 0.4 percent to $2.84 billion in the half -- had been held constant, the business was managing operational expenses responsibly, and major capital investments were on schedule, he said.
Guidance of adjusted group net profit of $460m to $500m for the full year was unchanged.
"The impact on Telecom of the economic slowdown does not appear to have accelerated this quarter, and revenues have remained relatively resilient with strong management focus," Dr Reynolds said.
Efforts to manage costs included the closure of Ferrit, saving $1m a month, a salary freeze for senior leaders, and a proposal to move some 250 New Zealand and 350 Australian contact centre and back office roles overseas during the next 18 months.
Capital spending of $632m was made during the half year. The W850 mobile build was on track, with the new 3G mobile network scheduled to launch in June.
The fibre-to-the-node broadband programme was ahead of schedule, and fixed line transformation was expected to see the first customers on the new voice over IP technology by the end of the year, Dr Reynolds said.
Telecom had assessed the impact of the slowing economy to be up to $10m during the second quarter, consistent with the first three months.
Broadband and mobile growth rates were slowing but given those were both increasingly penetrated markets, it was hard to attribute that impact entirely to current economic conditions.
The Telecom Retail unit reported a 13 percent fall in ebitda in the second quarter to $176m, due to a decline in revenues of 7 percent, partially offset by a reduction in costs of 3 percent.
GEN-i's second quarter ebitda dropped 3 percent to $118m, while external revenues were up 5 percent.
At CHORUS, ebitda fell 8 percent in the latest three months to $137m, partly reflecting the start-up costs of the business, Telecom said.
Australian subsidiary AAPT had ebitda up 39 percent to $A18m ($NZ22.8m) in the second quarter, reflecting the success of cost reduction initiatives.
A second quarter dividend of 6 cents per share is to be paid, in line with the company's previously advised intention to pay dividends of 24cps in each of the 2009 and 2010 financial years.
Telecom's share price closed at $2.66 yesterday, down from a year-high of $4.13 last February but up from the year-low of $2.19 in November.
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