UPDATE 2-NZ Telecom sees big profit fall, shares tumble

(Adds analyst comment, updates share price)

By Adrian Bathgate

WELLINGTON, Aug 8 (Reuters) - Telecom Corp (TEL.NZ: Quote, Profile, Research, Stock Buzz), New Zealand's largest-listed company, said it expected a 30 percent decline in profit in fiscal 2009 as increased competition eroded earnings, sending its shares down as much as 9 percent.

Telecom, a former state monopoly being forced by the government to split into three units to boost competition, said adjusted net profit in the fourth quarter of fiscal 2008 was down 30 percent, in line with expectations.

An analyst said Telecom's underlying operating numbers and the outlook were weak.

"The market was taken a bit by surprise at the level of competition Telecom is now facing, and the commentary from the company is bearish," said Grant Williamson, a director at brokerage Hamilton Hindin Greene.

Shares in Telecom were down 9 percent at NZ$3.35 by 0020 GMT, in a broader market .NZ50 down 1.6 percent.

Telecom forecast net profit for the full year to June 2009 at between NZ$500 million ($357 million) and 540 million, and said it did not expect a return to profit growth until the year to June 2011.

It repeated previous forecasts of a 4-6 percent decline in earnings before interest, tax, depreciation and amortisation (EBITDA) in the current fiscal year.  Continued...