Wellington, Aug 21 NZPA - Telecom boss Paul Reynolds has had $2 million from his annual bonus slashed as the company reported a 0.2 fall in full year adjusted earnings before interest, tax, depreciation and amortisation (ebitda).

In the year ending June, Dr Reynolds only received a $900,000 bonus under the "performance incentive scheme," compared to $3m the previous year.

The scheme, set annually by the board, is designed to reward the CEO for achieving pre-specific target levels of performance such as ebitda.

A Telecom spokesman said the company had a challenging year and Dr Reynolds' remuneration reflected that.

In addition to his $1.75m base salary, Dr Reynolds could receive up to $2.1m under the "long-term incentive" component, taking his total salary and incentive package for the year ending June to $5m, compared to $7.1m in the previous year.

The long-term incentive, like the performance incentive, is only paid out if the company performs a certain way and targets set by the board are met.

It includes $338,111 granted to Dr Reynolds for personal travel between New Zealand and the United Kingdom, plus accommodation costs and payment for tax advice.

In its annual report released yesterday, Telecom also announced a change to its long-term incentives scheme for next year, paying it in cash rather than with shares.

The changes will also apply to the company's executive team and the aim is to keep them working for Telecom as the company contemplates changes such as splitting into two.

The telco announced it had halted significant earnings declines, pointing to a fall of 0.2 percent in the company's full year adjusted ebitda.

Telecom reported a 4.5 percent fall in its bottom line full year net profit to $380 million, with revenue down 6.5 percent to $5.27 billion.

Adjusted ebitda for the year to June was $1.76b, and for the fourth quarter rose 5.4 percent to $428m.

"Telecom has halted the significant earnings decline of the previous two years and achieved notable improvements in the trajectory of each of its businesses," Dr Reynolds said.

The fall in revenue mainly reflected continued competitive and price pressure in the legacy fixed line businesses, Telecom said.

"Chorus, Gen-i and AAPT have each delivered ebitda growth for the year, and the turnaround in the Retail business is on track for FY11," Dr Reynolds said yeswterday.

A unchanged fourth quarter dividend of 6c per share is to be paid.

For the three months to June net earnings fell to $42m from $78m a year earlier, with adjusted net earnings down 40 percent from $70m to $42m.

Telecom was plagued by outages to its XT network at times during the year.

The company noted that mobile revenue in its Retail division fell 3.4 percent in the fourth quarter to $142m, while for the year it was up 0.7 percent to $594m.

The mobile revenue decline in the three months to June was partly due to high revenues a year earlier following the launch of the XT network, and also to the effect of reparation credits and loyalty discounts given to customers affected by partial XT outages, the company said.

Traditional mobile voice and text revenue also declined, mostly offset by gains in growth products such as mobile broadband and roaming revenues with consumer segments. Retail mobile broadband revenue rose 98 percent in the fourth quarter from a year earlier and voice roaming gained 37 percent.

Telecom said the XT mobile network continued to grow strongly during the fourth quarter, with 712,000 customer connections at June 30, up 20 percent on the previous quarter.

For the 2010 financial year, revenues were down across most revenue lines, most notably in calling revenue, while the

The company is expecting adjusted ebitda of $1.72b to $1.78b for the year to June 2011, with adjusted net earnings after tax between $300m and $340m, but the outlook is subject to material change.