Speaking at Telecom's first quarter results briefing this morning, Telecom CFO Russ Houlden said that, last year, an unexpectedly high Southern Cross Cable dividend (of $79 million) compensated for the effect of the recession.Mr Houlden has put the effect
Speaking at Telecom’s first quarter results briefing this morning, Telecom CFO Russ Houlden said that, last year, an unexpectedly high Southern Cross Cable dividend (of $79 million) compensated for the effect of the recession.
Mr Houlden has put the effect of the recession on Telecom’s ebitda at $10 million per quarter (or $20 million for the first half), the same allowance made in the previous five quarters.
But this year, Mr Houlden does not anticipate that a Southern Cross dividend will ride to the rescue.
For the December quarter just announced, the dividend from the international cable company (50% owned by Telecom, 40% by SingTel and 10% by Verizon) was $9 million.
Most analysts had expected a $35 million to $40 million SCC dividend, to be recorded this quarter or next. Today, a $9 million SCC dividend was recored.
The year's full SCC dividend is expected to come in between $50 million and $80 million, according to Telecom's official guidance.`
The Bermuda-incorporated Southern Cross Cable has been spending up recently on a capacity upgrade, and is also due to slash prices in March - a possible reaction to political pressure, and looming possible competition from Kordia.
However, Southern Cross Cable has always maintained that only a small minority of its profit comes from the Auckland to Sydney leg of its twin-fibre network, which runs up to the West Coast of the US via Hawaii.
