Telecom Corp., New Zealand’s biggest phone company, fell to an all-time low after it said a government plan to increase rural broadband speed may cut operating earnings by as much as NZ$56 million ($39 million) annually for the next three years.

The government is proceeding with a NZ$300 million program to lay faster cable to rural homes and schools, about NZ$252 million of which will be funded from a new development levy on phone companies. The NZ$56 million reduction in profit before interest, tax, depreciation and amortization is based on the government’s own estimate of the impact of the new levy structure, Telecom spokesman Mark Watts said today.

Telecom’s adjusted operating profit fell 6.5 percent to NZ$1.77 billion last year as costs of providing new services rose and competition and funding costs increased. Last month, it forecast earnings on the same basis would be little changed this year before rising as much as 6 percent through 2013, dependent on the rural broadband plan and other government initiatives.

Telecom fell 4 cents, or 1.8 percent, to NZ$2.17 at 5 p.m. in Wellington. It is the lowest since the stock started trading in July 1991.

The rural broadband program announced by Communications Minister Steven Joyce today confirms plans set out in September, Telecom said.

 source:Bloomberg