NZ Telecom Q1 earnings up 9 percent

WELLINGTON, New Zealand – Telecom Corp., New Zealand's largest listed company, reported a surprise lift in profits for the first quarter of the financial year thanks to a huge tax credit and strong growth in the mobile phone market.

Earnings after tax rose 9 percent to New Zealand dollars 163 million ($118 million) in the three months to Sept. 30 compared to the same period a year earlier, the company said in a statement.

Revenue for the quarter fell to NZ$1.36 billion ($1 billion) on the same quarter of the previous financial year but operating expenses dropped 7.7 percent to NZ$909 million (658 million).

Telecom said the result included a tax credit which delivered a one-off gain of NZ$43 million ($31 million) and a NZ$35 million (25 million) dividend from the 50 percent Telecom-owned Southern Cross Cable.

Earnings before interest, tax, depreciation and amortization fell 4.1 percent to NZ$447 million ($323 million), in line with the expectations, Telecom said.

"EBITDA has remained on track for our full year guidance, driven by a combination of revenue growth in mobile ... and the ongoing progress of our cost out program," CEO Paul Reynolds said in a statement.

The impact of the economic downturn had so far been modest, he said.

The company would pay a first quarter dividend of NZ$0.06 per share.