Telecom is expected to announce tomorrow a much reduced third-quarter operating profit but analysts will be focusing on any indication of the company's dividend policy for 2011 and beyond.
Forsyth Barr broker Suzanne Kinnaird said the full-year 2010 profit would be affected by changes to the Telecommunications Service Obligations (TSO) regime and rural broadband levy, price pressures and slower XT growth.
That implied a substantial cut to the dividend.
However, the consensus dividend expectation for 2001 was still 20c per share, with a range of 16c to 24c.
That included some offshore analysts who did not cover the stock closely.
Excluding those, the consensus became more like 18c, with a range of 16c to 20c, she said.
"Even this looks too high to us. We are at the low end of the range, having reduced our forecast 1c to 16c in February."
Given the uncertainties facing Telecom, Ms Kinnaird doubted whether a payout ratio target higher than the previous 75% of profit could be envisaged.
She was also unsure whether confidence in 2012 earnings growth would be sufficient to maintain a temporarily higher payout in 2011.
It was also possible the dividend announcement could be held until Telecom held its briefing day on May 27.
Forsyth Barr was forecasting New Zealand revenue to come in at $1.05 billion for the three months ended March, down 1% on the previous corresponding period (pcp).
New Zealand earnings before interest, tax, depreciation and amortisation (ebitda) would be down about 6% at $40 million but the pcp was strong with mobile customer acquisition costs about $30 million lower than usual.
Australian revenue was forecast to be down about 15% to $252 million, mainly due to falls in calling and resale.
Australian operating earnings would be up about 19%, helped by reduced costs and currency movements.
Group earnings before interest and tax were forecast to fall 29% to $182 million after higher depreciation.
Before-tax profit was forecast to be down 35% to $133 million after interest costs, similar to the second quarter.
Apart from the dividend policy, Ms Kinnaird expected Telecom to make comments about its troubled XT network.
Telecom had already released mobile numbers for the quarter, which showed XT continuing to grow by 118,000.
But overall, Telecom's mobile customers were down 19,000.
