Telecom Corp of New Zealand Ltd reported a rise of just 1.5% in net profit for the nine months to December 31, to the equivalent of $366m, but net profit for the third quarter was down 8.2%, although excluding Australian subsidiary Pacific Star – to be sold, third quarter earnings were flat. There were also special costs associated with the company’s new Xtra Internet service provider and its First Media cable television services. While volumes have continued to grow strongly, Telecom has reduced prices and faced the impact of a slower economy. These influences, coupled with volume and restructuring-driven cost increases, have meant a slowing in the rate of revenue growth, it said. With help from shareholders Ameritech Corp and Bell Atlantic Corp, it plans new cost-cutting initiatives for the 1997-98 financial year, and looks for a substantial decline in the rate of cost increases.
