Telecom is expected to report a decline in after-tax profit of more than $100 million for its third-quarter result on Friday, but brokers are not expecting any announcement of changes to overall financial guidance.
Telecom's full-year guidance for 2009 is for after-tax profit of $460 million to $500 million, before writedowns; three analysts' guidance ranging between $463.1 million and $474.7 million.
Forsyth Barr's forecast is $470 million, while ABN Amro Craigs has predicted $473.6 million.
For the forthcoming third-quarter result, Forsyth Barr is predicting after-tax profit down 19% from last year's $139 million to $112 million, while ABN Amro forecast a 27% decline to $102 million.
ABN broker Peter McIntyre said while Telecom's earlier guidance for a decline in full-year earnings before interest, tax, depreciation and amortisation of 5% to 8% was an important milestone in Telecom's recovery path, it could be overshadowed by regulatory uncertainty around the Government's $1.5 billion broadband policy and Telecom's imminent W850 "XT" mobile launch on May 13.
"The launch heralds a new era of competitive intensity in the New Zealand mobile phone market," Mr McIntyre said.
He said an annual briefing day in April had been shifted to May 28 and he did not expect a financial guidance update for 2010 until then.
Telecom's share price gained about 18% during past month and it was trading close to $2.80 yesterday.
Forsyth Barr broker Suzanne Kinnaird noted that unless competitor Vodafone was successful in gaining an injunction this week to stop the W850 launch, alleging interference issues, the new XT network could be a "significant positive share-price catalyst".
However, that might not be realised for three to six months.
"In the meantime, we expect Telecom's mobile [revenue] decline to continue," Ms Kinnaird said.
As with previous quarter, Ms Kinnaird expected revenue declines from Telecom's mobile and fixed voice service.
However, those would be offset by revenue rises from broadband/internet and information technology services.
ABN has a hold recommendation on the stock, with a 12-month target price of $2.41, while Forsyth Barr recommends holding and has a valuation at $3.83.
Both brokerages forecast a 6c-per-share dividend for the third quarter.
•The brokers' financial disclosure documents are available on request.
