NZT Telecom Corp. of New Zealand Limited Ads

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

28 March 2012

 

 

Telecom Corporation of New Zealand Limited (“Telecom”)

(Translation of registrant’s name into English)

 

 

New Zealand

(Jurisdiction of incorporation or organization)

Level 2,

Telecom Place

167 Victoria Street West

Auckland

New Zealand

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:     x   Form 20-F      ¨   Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):   ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):   ¨

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:   ¨     Yes   x     No

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):  n/a 

 

 

 

---

This report on Form 6-K contains the following:

1. Telecom Corporation of New Zealand Limited H1 FY12 Half Year Report

---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

						Telecom Corporation of New Zealand Limited
Date: 28 March 2012				By:		/s/ Tristan Gilbertson
				Name:		Tristan Gilbertson
				Title:		Group Company Secretary

---

 

Half Year Report

For the period ended 31 December 2011

Telecomnz

---

Introduction

From the CEO

Continued Operating Performance Improvements and a Successful Demerger

I am pleased to report that Telecom continued to deliver operating performance gains during a half year that also featured the successful demerger of its Chorus business.

The momentum built up last year has been maintained and we delivered improvements in customer satisfaction and operating efficiency, as well as real progress towards our strategic growth goals in broadband, mobile and ICT.

The period included five months of trading before the demerger of Chorus on 30 November 2011 and one month of trading post-demerger. The result includes a large non-cash accounting adjustment relating to the demerger of Chorus, as well as several other one-off items.

Due to the demerger timing and the associated accounting impact, year-on-year financial comparisons are complicated. However, the ongoing operational improvement in Telecom’s continuing business is clear after adjusting for the significant non-cash accounting and other impacts of the demerger.

Reported and adjusted result highlights

$m REPORTED ADJUSTED

H1 FY12 Change % H1 FY12 Change %

EBITDA – continuing operations 519 3.6 488 0.2 EBITDA – discontinued operations 1,137 NM 321 NM Total EBITDA 1,656 90.3 809 -6.8 Net Profit after Tax 1,006 NM 240 51.9 Capital expenditure 325 -32.3 325 -32.3

Half Year Report I For the period ended 31 December 2011

---

Introduction

The demerger was probably the most complex corporate transaction in recent New Zealand history and a world’s first for a telecommunications company. I am pleased it has helped deliver real value for customers and shareholders.

The continued focus on mobile, broadband and ICT has provided a strong platform for the future and delivered growth in New Zealand broadband revenues as well as average revenue per user growth (ARPU) in both mobile and broadband. There has also been further margin growth in IT services.

Customer satisfaction has improved in New Zealand, and the focus on simplicity and efficiency means that costs have declined faster than revenues, enabling Telecom to maintain flat adjusted EBITDA for its continuing operations.

This, along with emphasis on good control of capital expenditure, has resulted in a 25% improvement in adjusted Free Cash Flow when compared to the first half of the previous financial year.

Dividend

Telecom has declared an ordinary dividend of 9 cents per share for the half year to 31 December 2011. The dividend will be fully imputed in line with the corporate income tax rate.

As previously advised, Telecom has now moved to paying dividends on a half-yearly basis at a dividend payout ratio of approximately 90% of adjusted net earnings.

Subject to there being no adverse change in operating outlook, the dividend for H2 FY12 will be set to reflect the full year expected payout ratio. It is currently anticipated that the H2 FY12 dividend will be imputed in the range of 70% to 100%, although this prediction is highly sensitive to a number of factors. To the extent that dividends are not fully imputed, the amount of any supplementary dividend declared will be reduced on a pro-rata basis.

The payment dates for the H1 FY12 dividend are as follows:• New Zealand, Australia 5 April 2012• New York 13 April 2012

1Half Year Report I For the period ended 31 December 2011

---

Introduction

Dividend Reinvestment Plan

The Dividend Reinvestment Plan has been restored after it was suspended during the prior year due to Telecom’s involvement in the Government’s UFB process. For the H1 FY12 dividend, shares issued under the Dividend Reinvestment Plan will be issued at the prevailing market price of ordinary shares. As noted in the release of our half-year financial results to the market on 24 February 2012 the last date for the receipt of an election notice for participation in the Dividend Reinvestment Plan was 23 March 2012.

Capital Management

Telecom has also announced an on-market buyback of shares to return surplus capital to shareholders. The buyback of up to $300 million will be executed during the 2012 calendar year. Please see the information sent to shareholders on 24 February 2012 for more details or go to www.investor.telecom.co.nz.

Paul Reynolds

Chief Executive

2 Half Year Report I For the period ended 31 December 2011

---

Financials

Financial statements

Income statement

Six 31 months december ended Year 30 June ended unaudited 2011 unaudited 2010 audited 2011

(Dollars in millions, except per share amounts) notes nZ$ nZ$ nZ$

Operating revenues and other gains

Local service 457 486 955 Calling 394 479 928 Interconnection 53 100 195 Mobile 445 405 825 Data 268 291 574 Broadband and internet 238 250 487 IT services 267 274 561 Resale 93 124 235 Other operating revenue 97 114 199 Other gains 3 46 32 45 2,358 2,555 5,004

Operating expenses

Labour (411) (421) (832) Intercarrier costs (379) (490) (939) Other operating expenses (1,044) (1,139) (2,215) Asset impairments – – (215) Other expenses 3 (5) (4) (42)

Earnings before interest, taxation, depreciation and amortisation

– continuing operations 519 501 761

Depreciation (178) (259) (468) Amortisation (106) (118) (240)

Earnings before interest and taxation

– continuing operations 235 124 53

Finance income 8 10 15 Finance expense (67) (73) (152) Share of associates’ profits /(losses) – 1 1

Earnings/(losses) before income tax

– continuing operations 176 62 (83)

Income tax (expense)/benefit 4 (47) (28) 4

Earnings/(losses) from continuing operations 129 34 (79)

Earnings from discontinued operations net of tax 5 877 131 245

Net earnings for the period 1,006 165 166

Net earnings attributable to equity holders of the Company 1,005 164 164 Net earnings attributable to non controlling interest 1 1 2 1,006 165 166

Basic net earnings per share (in cents) 52 9 9 Diluted net earnings per share (in cents) 52 9 9 Basic and diluted earnings/(losses) per share from continuing operations (in cents) 7 2 (4) Weighted average number of ordinary shares outstanding (in millions) 1,925 1,923 1,924

Half Year Report I For the period ended 31 December 2011 3

---

Financials

Statement of comprehensive income

Six 31 monthS december ended Year 30 June ended unaudited 2011 unaudited 2010 audited 2011

(Dollars in millions) nZ$ nZ$ nZ$

Net earnings for the period 1,006 165 166

Other comprehensive income:

Translation of foreign operations 2 2 (8) Net investment hedges (3) (15) (11) Reclassified to income statement on winding up of foreign operation (28) – –Revaluation of long-term investments (20) 8 (48) Cash flow hedges 52 (13) (27)

Other comprehensive income/(loss) for the period 3 (18) (94) Total comprehensive income for the period 1,009 147 72

Total comprehensive income attributable to equity holders of the Company 1,008 146 70 Total comprehensive income attributable to non-controlling interest 1 1 2 1,009 147 72

4 Half Year Report I For the period ended 31 December 2011

---

Financials

Statement of changes in equity

Six31 monthS december ended Year 30 June ended unaudited 2011 unaudited 2010 audited 2011

(Dollars in millions) nZ$ nZ$ nZ$

Equity at the beginning of the period 2,311 2,545 2,545

Net earnings for the period 1,006 165 166 Other comprehensive income/(loss) 3 (18) (94)

Total comprehensive income for the period 1,009 147 72 Contributions by and distributions to owners:

Dividends (183) (183) (320) Supplementary dividends (25) (9) (28) Tax credit on supplementary dividends 25 9 28 Dividend Reinvestment Plan – 7 7 Issuance of shares under employee share schemes 9 5 7 Distribution of Chorus shares to shareholders (1,264) – –

Equity at the end of the period 1,882 2,521 2,311 Equity consists of: Contributed capital 1,161 1,528 1,528 Revaluation reserve (365) (289) (345) Foreign currency translation reserve (68) (33) (39) Hedge reserve (7) (45) (59) Deferred compensation 7 12 14 Retained earnings 1,148 1,342 1,207

Total equity attributable to equity holders of the Company 1,876 2,515 2,306

Minority interests 6 6 5

Total equity 1,882 2,521 2,311

Half Year Report I For the period ended 31 December 2011 5

---

Financials

Statement of financial position

Six31 monthS december ended Year 30 June ended unaudited 2011 unaudited 2010 audited 2011

(Dollars in millions) note nZ$ nZ$ nZ$

ASSETS

Current assets:

Cash 320 332 324 Collateral funds – 44 110 Short-term derivative assets 1 3 2 Receivables and prepayments 675 744 701 Taxation recoverable 46 1 –Inventories 82 91 60

Total current assets 1,124 1,215 1,197 Non-current assets: Long-term investments 105 186 125 Long-term receivables 184 41 44 Long-term derivative assets – 30 40 Intangible assets 803 1,096 1,094 Property, plant and equipment 1,760 4,224 3,892

Total non-current assets 2,852 5,577 5,195 Total assets 3,976 6,792 6,392

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable and accruals 839 979 991 Taxation payable – – 31 Short-term derivative liabilities 15 326 333 Short-term provisions 12 18 38 Debt due within one year 6 420 611 397

Total current liabilities 1,286 1,934 1,790 Non-current liabilities: Deferred tax liability 128 285 226 Long-term derivative liabilities 23 287 330 Long-term payables and provisions 39 44 35 Long-term debt 6 618 1,721 1,700

Total non-current liabilities 808 2,337 2,291

Total liabilities 2,094 4,271 4,081

Equity:

Share capital 1,161 1,528 1,528 Reserves (433) (355) (429) Retained earnings 1,148 1,342 1,207

Total equity attributable to equity holders of the Company 1,876 2,515 2,306

Non controlling interest 6 6 5

Total equity 1,882 2,521 2,311 Total liabilities and equity 3,976 6,792 6,392

6 Half Year Report I For the period ended 31 December 2011

---

Financials

Statement of cash flows

Six31 monthS december ended Year 30 June ended unaudited 2011 unaudited 2010 audited 2011

(Dollars in millions) noteS nZ$ nZ$ nZ$

Cash flows from operating activities

Cash received from customers 2,394 2,495 5,008 Interest income 8 10 15 Payments to suppliers and employees (1,730) (1,840) (3,421) Income tax (paid)/refunded (84) (74) (127) Interest paid (110) (97) (197) Dividend income 26 39 71

Net cash flow from operating activities 2 504 533 1,349 Cash flows from investing activities Sale of property, plant and equipment 1 3 3 Sale of business 3 5 76 76 Sale of long-term investments 3 1 100 107 Purchase of property, plant and equipment and intangibles (397) (589) (1,005) Capitalised interest paid (5) (10) (16)

Net cash flow from investing activities (395) (420) (835) Cash flows from financing activities (Increase)/decrease in collateral funds 110 (23) (89) Debt restructuring costs (211) – – Proceeds from derivatives 961 1 2 Repayment of derivatives (1,279) (11) (13) Payments on finance leases (3) – – Receipts on finance leases 10 – – Proceeds from short-term debt 2,012 413 663 Repayment of short-term debt (570) (307) (749) Repayment of long-term debt (961) (9) (21) Dividends paid (183) (177) (313)

Net cash flow from financing activities (114) (113) (520) Net cash flow (5) – (6) Opening cash position 324 339 339 Foreign exchange movement 1 (7) (9)

Closing cash position 320 332 324

Half Year Report I For the period ended 31 December 2011 7

---

Notes

Notes to the financial statements

Note 1: FINANCIAL STATEMENTS

These summarised financial statements have been prepared using the same accounting policies and methods of computation as, and should be read in conjunction with, the financial statements and related notes included in Telecom Corporation of New Zealand Limited (the ‘Company’s’) Annual Report for the year ended 30 June 2011 and the condensed consolidated interim financial statements for the six months ended 31 December 2011, which are available at: investor.telecom.co.nz. These summarised financial statements for the six months ended 31 December 2011 are unaudited and are expressed in New Zealand dollars, which is the Company’s functional currency. References in these summarised financial statements to ‘$’ are to New Zealand dollars. References to A$ are Australian dollars, GBP are pounds sterling, CA$ are Canadian dollars, US$ are United States dollars and CHF are Swiss francs. All financial information has been rounded to the nearest million, unless otherwise stated. These summarised financial statements have been extracted from the Company’s condensed consolidated interim financial statements for the six months ended 31 December 2011, which should be read in conjunction with these summarised financial statements.

As detailed in the annual report of the Company, together with its subsidiaries and associates (‘Telecom’) for the year ended 30 June 2011, Telecom was required to demerge its fixed line access infrastructure business in order for the demerged business to take the cornerstone role in the Government’s ultra-fast broadband (‘UFB’) initiative. Telecom successfully demerged Chorus Limited (‘Chorus’) on 30 November 2011 after 99.8% of votes cast by the Company’s shareholders voted in favour of the demerger proposal. With effect from 1 December 2011, Chorus became a stand-alone, separately listed company. Consequently, Telecom has separated the Chorus pre-demerger results and presented these results, including comparatives, as ‘discontinued operations’ in accordance with NZ IFRS 5: Non-current Assets Held for Sale and Discontinued Operations (‘IFRS 5’). There is no change to the overall Telecom reported result. Certain other comparative information has also been reclassified to conform with the current period’s presentation.

If new information about the discontinued operations obtained within the current financial year about the facts and circumstances that existed at the date of demerger identifies adjustments to the above amounts, or their presentation, then the disclosures will potentially be revised.

8 Half Year Report I For the period ended 31 December 2011

---

Notes

Change In Accounting Policies

There have been no material changes in accounting policies applied in the preparation of these summarised financial statements.

Note 2: RECONCILIATION OF NET EARNINGS TO NET CASH FLOWS FROM OPERATING ACTIVITIES

Six31 monthS december ended Year 30 June ended unaudited 2010 unaudited 2009 audited 2010

(Dollars in millions) nZ$ nZ$ nZ$

Net profit after tax 1,006 165 166 Adjustments to reconcile net earnings to net cash flows from operating activities: Depreciation and amortisation 389 530 1,027 Bad and doubtful accounts 7 10 21 Increase/(decrease) in deferred tax liability 62 (7) (46) Net gain on asset arrangements (88) – – Share of associates’ (profits)/losses – (1) (1) Gain on distribution of Chorus shares (775) – – Gain on novation of derivatives to Chorus (101) – – Gain on windup of foreign operations (28) – – Debt close-out costs included in financing cash flows 211 – – Asset impairments – – 257 Other (11) (23) (8) Changes in assets and liabilities net of effects of non-cash and investing and financing activities: Decrease/(increase) in accounts receivable and related items 9 (52) (27) Decrease/(increase) in inventories (27) (30) 1 Decrease/(increase) in current taxation (74) 20 30 Increase/(decrease) in accounts payable and related items (76) (79) (71)

Net cash flows from operating activities 504 533 1,349

Note 3: OTHER GAINS AND OTHER EXPENSES (continuing operations)

Six31 monthS december ended Year 30 June ended unaudited 2011 unaudited 2010 audited 2011

(Dollars in millions) nZ$ nZ$ nZ$

Other gains

Gain on sale 10 18 23 Various resolutions and settlements with supplier – 14 22 Gain on winding up of foreign operation 28 – – Interim settlement on insurances 8 – –

46 32 45

Other expenses

Natural disaster costs 5 4 42

5 4 42

Half Year Report I For the period ended 31 December 2011 9

---

Notes

In the six months ended 31 December 2011, other gains of $46 million represented:

• $10 million gain on the sale of Gen-i’s Software Solutions

business to Infosys and sale of indefeasible right of use capacity

• $28 million gain on the winding up of the Australian branch of

TCNZ Finance Limited

• $8 million confirmed as being due from insurers in relation to the February 2011 Canterbury earthquake claim.

In the six months ended 31 December 2011, other expenses of $5 million ($4 million for the six months ended 31 December 2010) represented costs recognised in relation to the Canterbury earthquakes.

Note 4: TAXATION (Continuing operations)

The continuing operations tax charge for the six months ended 31 December 2011 of $47 million was $19 million higher than the charge of $28 million in the six months ended 31 December 2010. This is primarily due to a $33 million increase in the current period tax charge as a result of higher continuing taxable earnings, partially offset by an $18 million impact in the comparative period as a result of a reduction in the value of certain tax credits following legislative changes, and a number of other items including the change in tax rate from the prior year rate of 30% to the current year rate of 28%.

10Half Year Report I For the period ended 31 December 2011

---

Notes

Note 5: DISCONTINUED OPERATIONS

Telecom successfully completed the demerger of Chorus on 30 November 2011. The condensed consolidated income statement has been re-presented to show the Chorus results to 30 November 2011 as a discontinued operation, separately from Telecom’s continuing operations. The discontinued operation results for the periods presented in the income statement are as follows:

30 FiVe noVember monthS 31 Six december monthS 30 Year June unaudited 2011 unaudited 2010 audited 2011

(Dollars in millions) nZ$ nZ$ nZ$

Operating revenues

Local service 13 13 26 Data 9 8 18 Broadband and internet 44 40 94 Other operating revenue 13 14 31 Internal revenues from Telecom continuing operations 417 465 963 496 540 1,132 Operating revenues Labour (17) (18) (37) Other operating expenses (137) (112) (243) Internal costs with Telecom continuing operations (21) (29) (51) Asset impairments – – (42) Depreciation (84) (130) (265) Amortisation (21) (23) (54) Net finance costs (20) (26) (51)

Earnings before income tax 196 202 389 Income tax expense (55) (63) (115)

Net earnings for the period

– before demerger related items 141 139 274 Demerger-related items: Gain on distribution of Chorus shares 775 – – Debt restructuring costs (110) – – Demerger and UFB costs (47) (12) (29) Net gain on asset arrangements between Chorus and Telecom 88 – – Tax benefit on demerger-related items 30 4 –Total demerger-related items 736 (8) (29)

Earnings before income tax 877 131 245

Basic earnings per share (in cents) 45 7 13 Diluted earnings per share (in cents) 45 7 13

The $775 million non-cash gain on demerger of Chorus relates to the difference between the fair value and book value of the net assets demerged to Chorus.

Debt restructuring costs of $110 million includes $36 million of fees that are an economic cost to Telecom, as well as $74 million of costs

Half Year Report I For the period ended 31 December 2011 11

---

Notes that relate to the realisation of economic positions held by Telecom.

Demerger and UFB costs of $47 million include advisors’ fees (including legal, accounting and investment banking fees), independent expert report costs and separation-related costs such as changes to IT systems, programme management and preparation for trading between Telecom and Chorus.

Net non-cash gains by Telecom on asset arrangements between Chorus and Telecom of $88 million represented:

• $83 million of net gains on entering into new finance lease

arrangements with Chorus on demerger

• $5 million gains on jointly controlled asset arrangements with

Chorus The carrying value of assets and liabilities disposed of as discontinued operations are:

30 november unaudited 2011

(Dollars in millions) nZ$

Assets

Receivables and prepayments 4 Short-term derivative assets 1 Current tax receivable 2 Inventories 4 Intangible assets and property, plant and equipment 2,343

Liabilities

Accounts payable and accruals 48 Short-term debt 1 Deferred tax liability 178 Long-term debt 1,582 Long-term derivatives 56

Net assets of discontinued operations at date of disposal 489

12 Half Year Report I For the period ended 31 December 2011

---

Notes

The cash flows of the discontinued operations are as follows:

30 Five november months 31 Six december monthS 30 Year June unaudited 2011 unaudited 2010 audited 2011

(Dollars in millions) nZ$ nZ$ nZ$

Cash flows from operating activities (171) (136) (276) Cash flows from investing activities (160) (190) (429) Cash flows from financing activities 228 – –Net cash flow from discontinued operations (103) (326) (705)

Note 6: CURRENT AND LONG-TERM DEBT

Six31 monthS december ended Year 30 June ended unaudited 2011 unaudited 2010 audited 2011

(Dollars in millions) nZ$ nZ$ nZ$

EMTN 80 1,509 1,468 TeleBonds 542 553 542 Short-term debt 419 276 93 Unamortised discount (3) (6) (6)

Total Debt 1,038 2,332 2,097

Debt due within one year 420 611 397 Debt due greater than one year 618 1,721 1,700

Total Debt 1,038 2,332 2,097

Telecom continues to have short-term financing programmes in place; a US$1 billion European Commercial Paper Programme, a NZ$500 million Note Facility of which $184 million of notes and $235 million of European commercial paper have been utilised at 31 December 2011. In addition to the short-term financing programmes, Telecom has committed stand-by facilities of NZ$700 million (30 June 2011: NZ$700 million) which is undrawn at 31 December 2011. The A$1.5 billion Short Term Note and Medium Term Note Programme was disestablished on the wind-up of TCNZ Finance Limited’s Australian branch.

During the six months ended 31 December 2011, Telecom repaid the US$250 million, CA$275 million and CHF200 million bonds, including the related derivatives.

Immediately prior to the demerger, Telecom drew NZ$1,106 million under a new syndicated facility. This drawn facility was included in the net assets transferred to Chorus and, from the date of demerger, was no longer part of Telecom’s facilities.

As part of the demerger, Telecom bondholders elected to exchange GBP235 million (NZ$625 million at hedged rates) of Telecom GBP EMTN bonds to Chorus GBP EMTN bonds, issued by Chorus under the Chorus EMTN Programme. Bondholders representing GBP40 million (NZ$110 million at hedged rates) did not elect to exchange to

Half Year Report I For the period ended 31 December 2011 13

---

Notes

Chorus bonds and consequently these bonds remained in Telecom. The related cross currency swaps were split and partially novated to Chorus along with the exchanged bonds. Prior to demerger, the interest rate swaps relating to the Telecom GBP bonds were closed out. New interest rate swaps have since been entered into, hedging the GBP bonds that remain in Telecom.

The costs associated with the debt restructuring above have been included in discontinued operations and are summarised in note 5.

Note 7: SIGNIFICANT EVENTS AFTER BALANCE DATE

Telecom has declared a fully imputed dividend of 9 cents per share in respect of the six months ended 31 December 2011.

On 10 February 2012, Telecom and the IRD agreed to settle the dispute relating to Telecom’s 2008 New Zealand tax return. On 23 February 2012, the Board of Directors approved an on-market share buyback of up to $300 million in the 2012 calendar year. A disclosure document was sent to shareholders prior to the offer being made.

Note 8: OTHER FINANCIAL INFORMATION

Net tangible assets per security

Net tangible assets per security

net tanGibLe aSSetS Per SecuritY

31 december 2011 31 december 2010

Net tangible assets per security $0.56 $0.74

Details of Associate Companies

eQuitY accounted aSSociateS and Joint Venture entitieS

PercentaGe intereSt heLd oF oWnerShiP at end contributionS ProFit to net oF Period nZ$ 31 december 31 december 31 december 31 december 2011 2010 2011 2010

Pacific Carriage Holdings Limited 50% 50% – –Southern Cross Cables Holdings Limited 50% 50% – –Community Telco Australia Pty Limited 50% 50% – –Yahoo!Xtra New Zealand Limited – 49% – 1

Details of entities over which control has been lost during the period

As mentioned in Note 5, Telecom successfully completed the demerger of Chorus on 30 November 2011.

14 Half Year Report I For the period ended 31 December 2011

---

Inquiries

Shareholder inquiries

Shareholders with inquiries about Shareholder inquiries about Telecom’s transactions, address changes or dividend operating and financial performance should payments should contact Telecom’s share be emailed to: registries. investor-info@telecom.co.nz or addressed to: new Zealand registry investor relations

Computershare Investor Services Limited

Private Bag 92119 Head of Investor Relations Auckland 1142 Telecom New Zealand Phone: 0-9-488 8777 Private Bag 92028, Fax: 0-9-488 8787 Auckland 1142 NZ Toll Free: 0800 737 100 New Zealand Email: enquiry@computershare.co.nz contact phone numbers

Website: www.computershare.com

Australia 800 123 350 united States registry

Canada 1 800 280 0398 Details for Depositary Receipts, Transfer Hong Kong 800 962 867 Agent, and Registrar New Zealand 0 800 737 500 The Bank of New York Singapore 800 641 1013 101 Barclay Street United Kingdom 0 800 960 283 New York, NY 10286 United States 1 800 208 2130 United States

Go to our investor centre at: Phone (US): 1-888-BNY-ADRs http://investor.telecom.co.nz Phone (non-US): 1-610 382 7833 Website: www.adrbny.com

Please note that no email address or fax number is provided. Inquiries can be submitted directly via the website. australian registry

Computershare Investor Services Pty Limited GPO Box 7045, Sydney NSW 2001, Australia Phone: 0-2-8234 5000 Freephone: 1 800 501 366 Fax 0-2-8234 5050 Email: melbourne.services@computershare.com.au Website: www.computershare.com

Half Year Report I For the period ended 31 December 2011 15

---

Disclaimer

Disclaimer

Forward-looking statements

This summarised report includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 regarding future events and the future financial performance of Telecom. Such forward-looking statements are based on the beliefs of management as well as on assumptions made by and information currently available at the time such statements were made. These forward-looking statements are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond Telecom’s control, and which may cause actual results to differ materially from those projected in the forward-looking statements contained in this report.

Factors that could cause actual results or performance to differ materially from those expressed or implied in the forward-looking statements are discussed in the H1 FY12 investor presentation, the H1 FY12 media release and in the risk factors and forward-looking statement disclaimer each in Telecom’s annual report on Form 20-F for the year ended 30 June 2011 filed with the U.S. Securities and Exchange Commission. Except as required by law or the listing rules of the stock exchanges on which Telecom is listed, Telecom undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

16 Half Year Report I For the period ended 31 December 2011

---

telecomnz

Telecom New Zealand Corporation Limited of ARBN 050 611 277