The New Zealand-based parent company of systems integrator, Gen-i, and telco carrier, AAPT, has reported a raise in tax expenses by up to $68 million over two years.
According to a statement released by Telecom (ASX:TEL), the massive rise in taxes comes thanks to changes in New Zealand taxation legislation.
“The 2010 [New Zealand] Budget, and subsequent Taxation [Budget Measures] Act 2010, contained two provisions which will have a material effect on tax expense,” it said. “The net accounting effect of these items in FY10 is an increase in Telecom’s tax expense of approximately $38m.”
The company also predicted its group net earnings would be on the lower end of between $NZ362m to $NZ402m, compared to earlier predictions of $400m to $440m.
“Naturally, Telecom’s shareholders will not welcome the impact of these tax law changes,” Telecom CFO, Russ Houlden, said in a statement.
But despite the marked impact of the new taxes on the parent company’s bottom line, a Telecom spokesperson insisted it would not have any effect on Australian operations.
Earlier this year, AAPT claimed to offer Australia’s first “unlimited ADSL 2+ Internet plans. But telco analyst, Paul Budde, said the move would make the telco’s problems worse.