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Telecom N.Z. First-Half Profit Rises 52% After Chorus Demerger

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Feb. 24 (Bloomberg) -- Telecom Corp. of New Zealand, the nation’s largest telephone company, said first-half profit rose 52 percent as depreciation and other costs fell after separating its Chorus network unit.

Adjusted after-tax earnings rose to NZ$240 million ($200 million) in the six months ended Dec. 31 from NZ$158 million a year earlier, the Auckland-based company said in a statement. Sales fell and operating profit from continued operations was unchanged.

“Costs have declined faster than revenues,” Chief Executive Officer Paul Reynolds said in the statement. “The ongoing operational improvement in Telecom’s continuing business is clear.”

Chorus was separatly listed in November after Telecom decided to restructure so it was eligible to partner the government in its ultrafast broadband program. The company plans a NZ$300 million share buyback to return excess capital to shareholders after the demerger, it said today.

The company included a NZ$28 million currency gain and earthquake insurance payments. Depreciation fell NZ$93 million.

Telecom expects second-half adjusted earnings will be NZ$160 million to NZ$190 million.

First-half sales fell 8.5 percent to NZ$2.32 billion amid increased competition, lower prices and the inclusion of a unit of Australia’s AAPT that has since been sold.

First-half operating profit, or earnings before interest, tax, depreciation and amortization, for continuing operations rose 0.2 percent to NZ$488 million.

Second-half operating profit is expected to be about NZ$560 million, Telecom said today

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

To contact the editor responsible for this story: Chris Bourke at cbourke4@bloomberg.net

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