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Telecom New Zealand has today announced earnings before EBITDA of NZ$447 million for the quarter to 30 September 2009, in line with guidance and a 4.1% decline on the equivalent quarter last year.

Group net earnings increased 9% to $163m when compared to the equivalent quarter in the prior financial year.  This was due in part to a $43m one-off effect from changes in tax law.  A Southern Cross dividend of $35m was received in the quarter, compared to $39m in Q1 FY09.

Revenue for the quarter fell 6.5% on the equivalent quarter in the previous financial year, to $1,356m, while operating expenses fell faster, to $909m, a 7.7% decrease on the equivalent quarter.

“EBITDA has remained on track for our full year guidance, driven by a combination of revenue growth in mobile thanks to a strong start for the XT mobile network, and the ongoing progress of our cost out programme,” said Paul Reynolds, CEO, Telecom New Zealand (NYSE: NZT)

“The impact of the economic downturn so far remains modest and once again all Undertakings milestones have been met on-time as New Zealand’s largest IT transformation continues at a fast pace.

“We have been successful in a market that has seen a significant rise in competition and customer choice. Telecom saw a net increase of 64,000 mobile customers during Q1, with 242,000 customers on XT at the end of its first full quarter of operation.  We are delighted that the great customer experience offered by XT encourages customers to use their mobile services more, with an increase of 16% in average revenue per user on like for like customers.

“The rest of the year will see the deployment of mobile HSPA+ technology, which offers maximum mobile data speeds of up to 21mb/s.  This confirms Telecom’s clear leadership in New Zealand and XT’s position as one of the fastest mobile networks in the world,” Dr Reynolds said.

Fixed broadband market growth has remained stable, at around 11%, with total connections on Telecom’s network reaching 899,000 during the quarter.  Telecom Retail attracted 50% of the new customers, and its share of the market has remained at 57%.

“Regarding the Government’s fibre plans, we have an open dialogue and relationship, and Telecom remains engaged at multiple levels of Government,” said Dr Reynolds.  “The current structure makes it difficult for Telecom to participate effectively while balancing shareholders’ interests.  Discussions have emphasised our support for the Government’s vision and our belief that given the right structure we can partner with Government to deliver ultra fast broadband faster and more cost effectively, to more New Zealanders than anyone else, avoiding network duplication.  We remain very flexible and open minded,” he said.