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The provider of telecommunications services advised that the drop in reported earnings was achieved on an operating revenue increase of 1.1% to $NZ2.83 billion ($2.48 billion). Adjusted net earnings from continuing perations for the half year period were down 2.7% to $NZ397 million ($348.38 million).
The company said the decline was due to a 2.3% decrease in EBITDA and higher depreciation and amortisation costs, partly offset by lower net interest expense.
CEO Paul Reynolds said that with the finalisation of the company's undertakings on operational separation closed, its focus was now on the fundamentals of the business.
The company is being forced by the NZ government to split into three units.
Dr Reynolds said the company had made decisions about leadership, structure and focus that would help secure future momentum, based on a focus on customers, with the achievement of regulatory clarity helping achieve that focus.
"While in some areas, notably Wholesale and ICT services, we performed well in the past quarter, in other areas new efforts and momentum is required," he said.
"During the quarter we implemented a comprehensive range of improvement plans for customers, focusing on speeds, anti-spam and high quality support services that collectively will improve customer service."
For the second quarter Telecom reported adjusted net earnings down 16.1%, to $NZ172 million ($A150.94 million) excluding contributions from the Yellow Pages Group, which has been sold.
However, Dr Reynolds said the quarter had seen solid performances in some areas.
"Our wholesale business performed well, with a continued focus on business development and growth, as did Gen-i with further customer wins including ACC and the Ministry of Social Development accounts," he said.
But while Telecom NZ had 90,000 mobile connections in the quarter, the company reported weaker revenue from their NZ operations as retail broadband connections were down due to aggressive competitor behaviour targeting the consumer customer base.
In Australia, the company reported that the integration of Powertel with AAPT was on track for completion in the third quarter. However, the company said the migration of retail customers to the company's customer service platform had been experiencing a higher than expected level of calls to call centres, causing delays in the migration plan.
Dr Reynolds said the soundness of the platform was not in question, but the delays meant it would take longer to shut down legacy platforms and realise migration cost benefits.
The company advised that half year operating revenues for the Australian business were up 9.9% to $632 million, EBITDA was up 270% to $37 million, while the loss from operations was $21 million.
The group said total operating revenues increased for data revenue, broadband and internet and IT services, but revenues for interconnection, mobile and calling fell with flat local service revenue.
Telecom NZ is to pay a fully imputed ordinary dividend for the quarter to 31 December of 7c per share.
At 1103 AEDT, shares in Telecom NZ had slipped 13c to $3.47.
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