Ann: GENERAL: TEL: Telecom acts decisively on cos

• Release Date: 28/03/13 11:32
• Summary: GENERAL: TEL: Telecom acts decisively on costs
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TEL
28/03/2013 09:32
GENERAL

REL: 0932 HRS Telecom Corporation of New Zealand Limited

GENERAL: TEL: Telecom acts decisively on costs

STOCK EXCHANGE ANNOUNCEMENT
28 March 2013

Telecom acts decisively on costs

At Telecom's half year profit announcement on 22 February 2013, the company
advised that it would book material one-off costs in H2 FY13 associated with
implementing its new strategy.

As part of its drive for simplification and a competitive cost base, the
company has moved swiftly on structural and portfolio changes. In the last
five weeks, decisions have been taken to:

o reset the scope of Gen-i Australia to its original rationale;
o reduce significantly corporate centre functions in management, HR, Finance,
Legal and Corporate Relations; and
o tighten the management and operational staff levels in all business units.

Telecom expects to incur one-off restructuring costs of $70 million to $80
million in FY13, associated with decisions taken to date including impacts of
resetting the scope of Gen-i Australia and downsizing costs in New Zealand.
The flow on impact of these changes onto revenues and non-labour operating
costs is uncertain.  Telecom believes that payroll costs (Opex and Capex)
will reduce by $90 million to $110 million on an annualised basis.

Telecom expects to incur further redundancy and other one-off costs
associated with cessation of business activities as it works through the
remainder of its strategic change process. Telecom will provide a second
update once decisions are taken.

As a result of this overall process, Telecom expects to reduce its number of
full time equivalent employees from 7,530 at 31 December 2012 to
approximately 6,300 to 6,600 by the middle of this year. Staff levels are
being reduced by constraints on recruitment activity, voluntary and
involuntary redundancies and the transfer of roles to other employers
associated with portfolio rationalisation decisions.

Telecom's adjusted EBITDA guidance for FY13 remains $1,040 million to $1,060
million. This guidance excludes the one-off restructuring costs described
above associated with implementing the new strategy.

Chief executive Simon Moutter commented: "This is an important step to build
a leaner, more agile organisation with a competitive cost structure, setting
us up to win in the market."

- ends -

For media queries, please contact:
Andrew Pirie
General Manager Corporate Relations
+64 (0) 27 555 0275

For investor relations queries, please contact:
Mark Laing
General Manager Capital Markets & Investor Relations
+64 (0) 27 227 5890
End CA:00234667 For:TEL    Type:GENERAL    Time:2013-03-28 09:32:29