TEL (Telecom NZ Ltd) [Archive] - Page 2

Snoopy

15-01-2007, 11:30 PM

quote:Originally posted by Major von Tempsky

So, does anyone (Snoopy?) have any figures on how much the sale of the Directories division will cause TEL to cut its dividend per quarter?

I don't think I have made the short list of bidders Major. So not having all the 'buyers package' info, I can't give you a definitive answer. Also the answer will depend on what Telecom do with all that money. $2.2billion is being touted in the media for directories. Telecom could simply repay debt, have a voluntary or compulsory share buyback, pay out a special dividend or some combination of all three ( or maybe option 4: there might be just enough money left to pay off Theresa with one of those golden parachutes ;-P ).

Nevertheless I will 'have a stab'.

Telecom is expecting FY2007 EBITDA from directories to be $160m on sales of $280m. That makes an EBITDA margin of nearly 60%, about the best in the world for this kind of business. I presume there is not much depreciation in the directories arm. All the printing would be contracted out on someone elses printing presses. So the only capital to be depreciated is probably some office chairs. There is absolutely no amortization in this division. As an (only slightly cheeky) approximation you could say that EBITDA=EBIT for the directories division.

I presume 'directories' is currently incororated within the 'landline' section of Telecom. By apportioning declared landline interest and tax payments in accordance with revenues, I calculate directories is earning a net profit after tax of some $95m. If the whole company is earning $800m after tax, this indicates a drop in earnings of around 12% without directories. With a current dividend rate of 7c/quarter, the TEL dividend is likely to drop by around 1c per quarter (Full year dividend to shrink from 28c to 24c).

With the TEL share price at $5, the company is valued at around $10billion. Take $2.2billion out of that and you are left with a company of value $7.8billion with $705m of residual earnings.

$705m/$7,800m gives a P/E of 11. Hardly expensive!

IMO there is quite a bit more upside in the Telecom share price yet. Any entry price under $5 will be looking cheap in a few months time.

SNOOPY

discl: hold TEL, $5.40 average price paid and expecting to be back there soon.

Major von Tempsky

16-01-2007, 02:24 PM

Thanks Snoopy, great stuff! They might even be able to absorb 1c a share per quarter and maintain dividends. I was unsure whether to keep holding after a Directories sale but I think I now will. I note that British TEL restarted a Directories division sometime after selling theirs.
The Press this morning avers that Telecom will do a share buyback but other stories talk of a return of capital. Ditto the timing, some stories state after 30th June, others say "quite soon after the sale".
As another even hairier challenge Snoopy (and I wouldn't hold it against you if you were quite wrong), any ideas on what the "residual dividend" might be for the June quarter this year, independent of any Directories sale? i.e. Tel said they have been working on 7cps quarterly dividend with any excess to be distributed in the June quarter :)
And on a final note, this Paul Budde character, its hard to believe the depth of his personal vindictiveness against TEL...it would to seem to me he has some grudge....perhaps he was passed over for a TEL appointment he thought he should have had.....

Deev8

16-01-2007, 02:57 PM

quote:Originally posted by Major von Tempsky

The Press this morning avers that Telecom will do a share buyback but other stories talk of a return of capital.

Personally I hope that they use any that isn't reinvested in the business to either repay debt or pay a special dividend. I've never been a great supporter of buybacks.

Steve

16-01-2007, 06:42 PM

Now the 'kiwi share' is under review! I can't see this review having much of a financial impact and it is good that they may have a look at the 10% cap on shareholdings

Telecom shares fall as new review revealed (http://www.stuff.co.nz/3930557a13.html)
Telecommunications Minister David Cunliffe today announced a review of Telecom's "Kiwi Share" obligations relating to the provision of rural Internet services.

The Kiwi Share, now known as the Telecommunications Service Obligations (TSO), was set up when Telecom was privatised in 1990 and guaranteed free local calling to all regions.

Mr Cunliffe said the TSO was being reviewed to ensure it took account of fast-changing technologies. It would scope whether the TSO should cover rural broadband Internet access.

Mr Cunliffe signalled the rules would be tightened rather than relaxed, saying New Zealanders should all have access to affordable basic telephone services.

"We have no intention of moving away from the basic principle in the Kiwi Share of preserving free local calling for residential telephone users."

Restrictions on ownership of Telecom, which give the Government a say on any foreign entity owning over 49.9 percent, or any entity owning 10 percent or more, would also be reviewed.

Snoopy

16-01-2007, 06:59 PM

quote:Originally posted by Major von Tempsky

Thanks Snoopy, great stuff! They might even be able to absorb 1c a share per quarter and maintain dividends.

In the FY2006 annual report p51, Telecom are projecting annual earnings of $820m-$860m for FY2007, compared to $820m for FY2006.
That means perhaps no increase in profit, or, in a best case scenario, a rise in profit of 5%.

There is no way that can compensate for taking 12% of the profit away by stripping out directories. There is no way that they can reduce the dividend payout ratio without affecting the capital investment program. I think TEL dividends will have to drop if directories go.

quote:
The Press this morning avers that Telecom will do a share buyback but other stories talk of a return of capital. Ditto the timing, some stories state after 30th June, others say "quite soon after the sale".

The way I see it, a share buyback *is* a return of capital. And even if a directories sale is announced before June it is unlikely the actual transfer of ownership will occur before 30th June. IOW I can't see any inconsitency in the news articles.

quote:
As another even hairier challenge Snoopy (and I wouldn't hold it against you if you were quite wrong), any ideas on what the "residual dividend" might be for the June quarter this year, independent of any Directories sale? i.e. Tel said they have been working on 7cps quarterly dividend with any excess to be distributed in the June quarter

Page 51 of the annual report says:

"Based on Telecom's current expectations for the next twelve months, the target dividend payout ratio will be 75% of net earnings adjusted for relevant non-cash items."

75% of $820m equates to 32cps, or a bonus dividend in the last quarter of 4cps (above the 4x7=28 we 'expect'). I take your word at not holding me to my prediction!

SNOOPY

kura

16-01-2007, 08:46 PM

Could someone explain to me why rural areas can't get broadband at the moment, is it technical, or just cost related ?

As I was thinking about govt rules re provision of naked DSL as part of unbundling, and if rural areas can't get broadband, then it will defeat the intention of naked DSL for a goodly chunk of the country. Hmm, maybe thats why govt has announced the review ?

Snoopy

16-01-2007, 11:13 PM

quote:Originally posted by kura

Could someone explain to me why rural areas can't get broadband at the moment, is it technical, or just cost related ?

As I was thinking about govt rules re provision of naked DSL as part of unbundling, and if rural areas can't get broadband, then it will defeat the intention of naked DSL for a goodly chunk of the country. Hmm, maybe thats why govt has announced the review ?

I write this with the proviso that someone more teletech savy than me may correct me....

The issue of rural broadband through the telecom network is both technical and cost related. The Broadband ADSL technology that Telecom uses over the good old copper wires is good if your house is located in a sweet spot within the network. The problem is that the maximum connection speeds advertised as attainable drop away rapidly with your distance from your nearest Telecom 'box', which is a problem if you are more than 2-3 kilometres from it. In the old days the nearest 'box' was your local telecom exchange. These days with switching equipment getting smaller and cheaper, the nearest box might be a green plastic distribution node just down your street. The problem is the less houses in a given location, the longer it will take to pay back upgrades to the local 'box'. So why would any telco put their investment dollars into a rural area when they can spend the same money in an urban area and cherry pick more customers?

The 'answer' for rural areas is apparently a wireless broadband systen using satellite dishes. This is nothing to do with Telecom though. That means naked DSL will do precisely zip for rural consumers.

SNOOPY

The BOWMAN

16-01-2007, 11:37 PM

Thanks for your posts, Snoopy. They are very informative.

Major von Tempsky

17-01-2007, 09:44 AM

Agreed, thank you Snoopy.
I like the bit in today's Press '"There's a lot more to come from Telecom with the expectations of the Yellow Pages, what's happening with Telstra's price, European telcos have been firm for a couple of months now", Nigel Scott of ABN Amro Craigs said.' :)

Steve

18-01-2007, 09:07 PM

My rural-living parents and their neighbours have trouble with the internet. Telecom are not really interested in the problem, although they have identified that the issue is situated approx 5km from where they live. Perhaps this latest review could make a difference.

metro

18-01-2007, 09:53 PM

Does Telecom actually have FTN (fibre to the node)? Clearly TelstraCLEAr does but does TEL? in all area? major cities? metropolitan areas? small towns??

quote:Originally posted by Snoopy

quote:Originally posted by kura

Could someone explain to me why rural areas can't get broadband at the moment, is it technical, or just cost related ?

As I was thinking about govt rules re provision of naked DSL as part of unbundling, and if rural areas can't get broadband, then it will defeat the intention of naked DSL for a goodly chunk of the country. Hmm, maybe thats why govt has announced the review ?

I write this with the proviso that someone more teletech savy than me may correct me....

The issue of rural broadband through the telecom network is both technical and cost related. The Broadband ADSL technology that Telecom uses over the good old copper wires is good if your house is located in a sweet spot within the network. The problem is that the maximum connection speeds advertised as attainable drop away rapidly with your distance from your nearest Telecom 'box', which is a problem if you are more than 2-3 kilometres from it. In the old days the nearest 'box' was your local telecom exchange. These days with switching equipment getting smaller and cheaper, the nearest box might be a green plastic distribution node just down your street. The problem is the less houses in a given location, the longer it will take to pay back upgrades to the local 'box'. So why would any telco put their investment dollars into a rural area when they can spend the same money in an urban area and cherry pick more customers?

The 'answer' for rural areas is apparently a wireless broadband systen using satellite dishes. This is nothing to do with Telecom though. That means naked DSL will do precisely zip for rural consumers.

SNOOPY

Snoopy

18-01-2007, 11:55 PM

quote:Originally posted by metro

Does Telecom actually have FTN (fibre to the node)? Clearly TelstraCLEAr does but does TEL? in all area? major cities? metropolitan areas? small towns??

I think the accepted acronym for 'Fibre to the Node' is FTTN metro. And no I don't think Telecom has it.

SNOOPY

Steve

23-01-2007, 09:53 AM

The competition is ready and waiting...

Orcon to match Telecom fixed line (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10420381)
Internet and phone company Orcon says it will be the first to market a true alternative to Telecom's fixed-line telephone and internet services.

Orcon regulatory manager Scott Bartlett said the provision of voice over internet protocol (VoIP) - which is phone over the internet -would be particularly significant because it would allow consumers on a large scale to cut the cord with Telecom.

From May, customers would no longer be forced to rent a phone line from Telecom for phone and internet services, he said.

"It is the first truly differentiated offering to Telecom. It won't be like other internet service provider offerings that are dependent on how fast your broadband line goes or how the service runs," said Bartlett.

Deev8

23-01-2007, 03:49 PM

quote:Originally posted by Steve

My rural-living parents and their neighbours have trouble with the internet.

You don't need to be THAT rural to have problems. A friend recently moved to a property that is 35km from the Sky Tower and a 10 min drive from North Harbour stadium - he was dumbfounded when Telecom told him that ADSL was not available in the area, but perhaps it would be before the end of 2007.

Major von Tempsky

23-01-2007, 05:38 PM

Why does anyone with a problem - e.g. rural living which is a matter of choice, - expect to be subsidised by the government or by government directing productive enterprises to subsidise them?
What happened to the notion of personal responsibilty and initiative?
Why not look for a radio alternative?
Its just symptomatic of the whole psychological malaise of NZ and why we are down the bottom of the OECD rankings.

Steve

24-01-2007, 09:28 AM

Telecom's Aussie arm cosies up to Powertel (http://www.stuff.co.nz/3938606a13.html)
Telecom's Australian subsidiary AAPT is understood to be in merger talks with Sydney-based network company PowerTel.

Telecom already has an agreement with PowerTel, signed in November, under which AAPT offers its business and residential customers a range of high-speed broadband and access services.

The New Zealand Herald said today it was now understood the New Zealand telco was negotiating to buy a blocking stake in PowerTel in order to deflect a takeover bid from Optus.

Steve

24-01-2007, 09:37 AM

GSJBW not so keen on TEL. Good to see that they can give an honest 'sell' recommendation while being an advisor to TEL

Telecom shares on way down, says analyst (http://www.stuff.co.nz/3937914a13.html)
Telecom is overvalued and its earnings are likely to decline as regulatory uncertainty and increased competition continue to bite, Goldman Sachs JBWere has said in a research note.
...
In November, Goldman Sachs JBWere was hired by Telecom to sell its Yellow Pages directories business.
...
In the longer term, the current share price did not reflect the risk of further government regulation or competition from new mobile phone companies, the note said.
...
Goldman Sachs JBWere gives Telecom a market perform rating, but is advising clients to sell.

Major von Tempsky

24-01-2007, 11:28 AM

I wouldn't give you tuppence for GSJBWere's chances of handling future TEL business ;)
It may be honest but it was also somewhat stupid as a moment's reflection will show.
(a) valuation. TEL is really NZ's only "International" stock in terms of volume value going through. It leaves everything else for dead. Only some of the dual listed stocks equate in terms of being "internationally" valued. If a significant overseas player (and I guess they're nearly all significant in terms of size compared to NZ) wants to do a play in NZ for currency/tax/diversification & reasons, TEL is the only one big enough to offer the liquidity and the certainty of being able to get in and out without affecting the price. As overseas P/E's and Div yields are much much "richer" than NZ's its always going to look a real bargain whatever "elevated" NZ levels TEL reaches.
(b) they've ignored the successful British TEL experience which has coped really well with deregulation and splitting and gone on from there.
(c) aprt from specialist applications the future in TEL is cable not wireless.

COLIN

24-01-2007, 02:34 PM

An interesting announcement by Telstra today. They are taking action in the High Court against the ACCC (their competition watchdog) claiming that the wholesale prices they are being forced to accept are in breach of the Australian Constitution which effectively states that the Government can't seize your assets without offering adequate compensation. Telecom here might be able to take similar action?

Steve

24-01-2007, 02:50 PM

quote:Originally posted by COLIN

Telecom here might be able to take similar action?

If they could do it, I'm sure that they would have made the appropriate noises by now...

Deev8

24-01-2007, 05:17 PM

quote:Originally posted by Major von Tempsky

As overseas P/E's and Div yields are much much "richer" than NZ's its always going to look a real bargain whatever "elevated" NZ levels TEL reaches.

Of course you can find some examples of "much much richer" P/Es and yields, but it's not generally the case. For example compare Telecom with two Telcos listed in the UK - BT Group and Vodafone.

Telecom 2007 forecast P/E 12.3, Yield 6.1%
BT Group 2007 forecast P/E 13.9, Yield 4.5%
Vodafone 2007 forecast P/E 13.5, Yield 4.4%

So it's true that the British-listed companies do have richer fundamental ratios, but the gap isn't huge.

The really huge difference between the companies is their market capitalisations - at current exchange rates BT Group is around 7 times bigger than Telecom and Vodafone something like 22 times bigger.

Looking at markets as a whole, it appears that the P/E ratio for the NZX 50 is 17.0 and the market yield is 3.5% (if ASB Securities can be believed). The FTSE 100 is has a more modest P/E of 13.4 and slightly lower yield of 3.1%.

COLIN

24-01-2007, 09:49 PM

I read somewhere today that global P/E's average around 14.5% versus our 17% and that we customarily operate at a discount of around 20% to the global scene, i.e. that our P/E's are usually lower than the rest of the world. (I think it also said that earnings growth of our listed companies in 2006 was only 1%). The article went on to try and analyse the reasons for the current "anomaly", listing such factors as:
- scarcity of local scrip due to shrinking number of listings
- impending Kiwisaver scheme
- demands of Cullen Fund
- impending taxation changes for managed funds, thus making share investing, via this medium, more attractive.
- can't recall what any other points were.

So, its basically supply/demand factors, or scarcity value, in a tiny market - which, I seem to recall from elsewhere, represents only something like 0.2% of the global sharemarket - and shrinking.

Which all leads me to think that maybe the time is ripe to take advantage of the present "market P/E anomaly" as well as the overvalued Kiwi dollar and switch more of my portfolio offshore.

The BOWMAN

24-01-2007, 10:58 PM

Brokers, analysts, if they really know something, they will not need to get into the CBD during rush hours everyday with suit and ties and helping YOU to invest money.

ASB Securities did the same thing last year on TV3, they specifically said that TEL will bounce back to $4.50 and in two months time drop to $3.50 (something like that anyway). I definitely had my respect for their courage to do that on TV.

Major von Tempsky

25-01-2007, 07:35 AM

Oke Colin, but the factors mentioned were fairly recent and the anomaly of NZ shares being priced much lower than international shares has been going on for yonks, both P/E's, and more dramatically earnings yield, which in the telcos quoted above Colin's post were only two thirds of TEL. My point again proven by the quotes - TEL is our only International size share as far as trading goes and overseas investors - who are not just invested in overseas telcos - (and most of TEL is owned overseas) see it as a bargain in P/E and dividend terms.
Nor do most overseas investors rate GSBJBWere's NZ newsletter in terms of advice for their global investing.
Overall result of GSBJBWere's rather muddled thinking yesterday was that TEL actually went up!
Naturally I take advantage of the better P/E's and gross yields and tax situation to do my share investing only in NZ these days and it pays off handsomely.

metro

25-01-2007, 06:20 PM

Arbitrary free calling areas drawn up by Telecom many years ago are outrageous and very unfair...so here's an appropriate response.

TelstraClear expands free local calling areas

1:50PM Thursday January 25, 2007

TelstraClear has re-drawn toll call boundaries in the first of a number of new services it has planned for this year.

The "Big Back Yard" deal announced by the company today offers free regional phone calls to homes in the Auckland, Wellington and Christchurch phone book area.

The plan was welcomed by the Telecom Users Association of New Zealand head Ernie Newman.

He said the arbitrary free local calling areas determined years ago by Telecom have created artificial boundaries within wider communities.

"TelstraClear has offered a better deal to people in places like Orewa and Rangiora who have suffered for years by having to pay toll call rates to Auckland and Christchurch respectively. Its a significant breakthrough for the communities in those areas," said Newman.

He said the next step is to balance the inequity affecting customers outside of the main centres, particular those in smaller towns.

"These towns have a tiny range of subscribers within their free calling area - sometimes only a few hundred. We hope in the future that either TelstraClear or some other service provider will grab the opportunity to offer regional free calling to these communities on a similar basis."

The deal:

* Available to residential customers in areas covered by the latest Auckland, Wellington and Christchurch phone books .

* Auckland - includes Auckland, Pukekohe, Hibiscus Coast, Helensville, Warkworth and Great Barrier local calling areas.

* Wellington - includes Wellington and the Kapiti Coast.

* Christchurch - includes Christchurch, Ashburton, Darfield, Rangiora, Culverden/Waiau/Hanmer Springs, Akaroa, Amberley, Cheviot and Kaikoura. It excludes calls to and from the Chatham Islands.

- NZ HERALD STAFF

metro

25-01-2007, 07:57 PM

I agree 100% with this "research note". I think they have hit it right on the button. Quite frightening really...I've never agreed with GSJBW before!

quote:Originally posted by Steve

GSJBW Telecom shares on way down, says analyst (http://www.stuff.co.nz/3937914a13.html)
Telecom is overvalued and its earnings are likely to decline as regulatory uncertainty and increased competition continue to bite, Goldman Sachs JBWere has said in a research note.
In the longer term, the current share price did not reflect the risk of further government regulation or competition from new mobile phone companies, the note said.

StainlessSteelRat

25-01-2007, 08:08 PM

http://www.nzherald.co.nz/category/story.cfm?c_id=27&objectid=10420751

[quote]quote:Peter Griffin: Fibre's needed in our backbone, not lowly copper
Thursday January 25, 2007
By Peter Griffin

Peter Griffin
The news media are often a good gauge of public opinion - and a sounding board for what's really annoying people.

In the past that has been everything from bank fees and leaky buildings to high petrol prices and crazy waterfront stadium schemes.

But if the stream of messages sent to the Herald by readers these days is anything to go by, slow and unreliable broadband is the current bugbear of the masses.

On an almost daily basis I personally receive broadband horror stories from readers. The pattern is familiar: a user upgrades from dial-up to broadband to free up the phone line and surf the web faster. The promised speeds aren't delivered, so the customer complains, receives shocking customer service and gets angry and distrustful of broadband providers.

Take the case of Sione Tu'akoi:

"Three weeks ago we decided to move our internet from Clearnet dial-up and signed up with Xtra broadband. To our horror the Xtra broadband speed is slower than Clearnet dialup connection," he wrote.

Despite complaining, speed testing his line and sending the results to the Xtra experts, Sione hasn't heard a bean back from them - and he's furious.

Ian Mead owns a computer business and says he is well able to identify with what he calls "Telecom's wholesale failure to deliver".

"My customers frequently complain that, to them, it seems they are being pushed from dialup to ADSL and receiving heftier bills for a similar service which is not what broadband is supposed to be."

Others are angry that the speed at which you can upload data to the internet is limited on many plans offered by internet providers, to 128Kbps. That makes sending large files a tediously slow process and is a problem for many small businesses who are increasingly exchanging documents and photographs online.

Many factors influence what broadband connection speeds you get and it is not always Telecom's fault if the pipe isn't delivering what was promised.

But enough dissatisfaction has been voiced since Telecom and its competitors dramatically increased maximum download speeds last year to suggest there's a gap between the promise of broadband and what is being delivered.

As a result, the internet industry risks alienating customers, just as they expect them to start paying more for web access.

Telecom's competitors are itching to take advantage of local loop unbundling to take business off Telecom.

"The year will bring early access to Telecom's copper and the ability to provide a truly differentiated offer to consumers," iHug boss Mark Rushworth told the Herald last week.

But will these different services mean better services, and more specifically, better and more reliable download speeds?

No, says a former Telecom engineering consultant, who spent 10 years working for the company but does not wish to be identified.

"ADSL was developed in the US by Bell Labs, in the mid 1990s, as an interim measure before the telcos needed to install optic fibre cable to all subscribers," he said.

"The telcos here and overseas found they could make a quick buck from the perception, by the customer, that they were getting a high-speed internet connection."

In other words, as long as we're relying on Telecom's copper wires, we're going to be a frustrated bunch of web surfers.

No national residential fibre network has ever been laid by Telecom and while TelstraClear installed a hybrid fibre cable network in parts of Wellington and Christchurch, it was thwarted in reaching the Auckland market when its plans to string overhead fibre cables through the suburbs met with resistance in 2002.

Laying fibre now isn't out of the question, but it's so expensive to do that no telco, Telecom included, would approach suc

Steve

25-01-2007, 08:44 PM

quote:Originally posted by StainlessSteelRat

As i understand it, one company (not Telecom) already has a fibre network run around Auckland. The question is, what are they going to do with it?

SSR, for those of us who don't live in Auckland could you name the company?

metro

25-01-2007, 08:50 PM

Steve: As I understand it TelstraCLEAR has fibre in some parts of Auckland e.g. the CBD, central Takapuna, Newmarket. Apart from that I wouldn't know who would have fibre "around Auckland", if anyone.

Steve

25-01-2007, 08:54 PM

Is there any reason that they are holding off from using it? Did they have to wait for the LLU?

metro

25-01-2007, 09:14 PM

This is why I don't like Telecom. They use phrases like max/max speed which over their aging 1950s copper network can be very slow

At least with TelstraCLEAR you know what your getting. Upload and download sppeds are the same and the speed is 10Mbps..and as well you get crystal clear Digital TV. Why anyone has TEL's "broadband' and 256kps upload speed is beyond me.

i]"Take the case of Sione Tu'akoi:

"Three weeks ago we decided to move our internet from Clearnet dial-up and signed up with Xtra broadband. To our horror the Xtra broadband speed is slower than Clearnet dialup connection," he wrote".[/i]

metro

25-01-2007, 09:16 PM

Yes, TEL controls "the last mile". Which is what unbundling is all about - Opening up the last mile to all Telcos just like in every overseas country except Mexico

quote:Originally posted by Steve

Is there any reason that they are holding off from using it? Did they have to wait for the LLU?

Steve

26-01-2007, 06:56 AM

It obviously depends who you are that determines how quick your complaint is acted upon!

Telecom finally organises broadband for multimillionaire (http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10420956)
Telecom's rivals flocked to the smart frontdoor of multimillionaire Jenny Gibbs yesterday to offer her broadband, only to be pipped at the post by the giant telco.

The firm moved swiftly to get its service to the unhappy arts patron on the same day she went public about waiting two years to get broadband in her Paritai Drive home.

Mrs Gibbs had been told that the exchange in her area had no extra capacity. But soon after yesterday's Herald article appeared, Telecom connected Mrs Gibbs as its rivals rushed to her dress-circle street in Orakei to show off their alternatives.

Major von Tempsky

26-01-2007, 09:50 AM

It cuts both ways. I had a dial-up a/c with TelstraClear, I asked them for Broadband - they said they couldn't do it - so I switched to Telecom and got Broadband.
Its no good trying to demonise Telecom, there's demons everywhere. I've found Telecoms technical support extremely good and patient, incl for when I have accidentally just slightly knocked a plug loose and can't work out what the problem is.
Go to Oz and you'll find an equivalent band of bods desperately demonising Telstra!
The one that makes me laugh is TelstraClear trying to portray itself as the oppressed underdog in NZ at the same time as it is putting the boot very ruthlessly into any competition in Australia. Any kicks TelstraClear get in NZ they very richly deserve for what they do in Oz.

barnsley bill

26-01-2007, 09:59 AM

I am staggered at the level of indignation showed by some posters about telecom. Some of the posts would be better suited to left wing whiney blogs rather than a sharetrading forum.
When will people understand the fact that Tel is a private business and not a social service. If you are unhappy call your labour mates and ask them to buy the company back.

StainlessSteelRat

26-01-2007, 11:22 AM

quote:Originally posted by Steve
SSR, for those of us who don't live in Auckland could you name the company?

They are called Vector Communications - once they finish fighting over the governance structure and work out the goldmine they are sitting on we may actually get a real "broadband" service.

http://www.vectorcommunications.co.nz/network/network_location.asp
According to this page, their network stretches from Pakuranga to Albany, though having made enquiries into getting a connection, i'm not completely sure how extensive the network is.

Halebop

26-01-2007, 04:04 PM

It might have changed in the last couple of years but Vector's network centred around CBD and outlying commercial hubs. They hadn't made the sort of billion+ investment required to service the domestic market although owning power lines is a good start if they could force stringing fibre along them past the RMA.

Westie

27-01-2007, 11:29 AM

quote:I am staggered at the level of indignation showed by some posters about telecom. Some of the posts would be better suited to left wing whiney blogs rather than a sharetrading forum.

Let them rant! I love em! Their inability to separate emotions from business/economic decisions is what creates opportunities for others.

I just made 20% off my tel shares. When i was buying everyone was talking about the price going to $3.00..........[:0]

Major von Tempsky

31-01-2007, 11:05 AM

What-ho on TEL buying PowerTel in Oz?
You fellows are very slow to react, like watching paint dry. What happens if I tap your knee cap with a hammer?
Interesting yesterday how the market dropped by 7cps, obviously insider trading. Always when a company proposes buying another the proposer shares drop and the target shares rise.
But aside from that rather moronic reaction, I think its a good move and I back it.
PowerTel has been doing what AAPT can't, setting up its own direct access to customers independent of Telstra, and growing and making a profit. So AAPT/Telecom takes over PowertEl leaving its present management and dynamism in place - cuts them lots of slack to get on with it - and we all (TEL shareholders) live happily ever after.
Now lets wait for the moaners and grizzlers to arrive.

Ptolemy

02-02-2007, 12:00 PM

OK, I'll start off. Interesting there is no discussion on TGs resignation today - thought their would be a host of "good riddances". Also a reasonable result for TNZ.

ON TG I actually quite liked here - she was someone who spoke as she saw it and clearly had huge intelectual horsepower in a rough kiwi sort of way. Interesting comment in a stuff article - she was highly though of overseas but oft criticised here in NZ. Says something for NZ psyche.

Shares dipped on result and resignation news.

Bling_Bling

02-02-2007, 12:42 PM

quote:Originally posted by Ptolemy

Interesting there is no discussion on TGs resignation today

She is HOT, i will date her. :D[:o)]

Steve

02-02-2007, 01:59 PM

quote:Originally posted by Bling_Bling

quote:Originally posted by Ptolemy

Interesting there is no discussion on TGs resignation today

She is HOT, i will date her. :D[:o)]

Well she should have some time for you soon...

Halebop

02-02-2007, 03:24 PM

quote:Originally posted by Ptolemy

OK, I'll start off. Interesting there is no discussion on TGs resignation today - thought their would be a host of "good riddances". Also a reasonable result for TNZ.

ON TG I actually quite liked here - she was someone who spoke as she saw it and clearly had huge intellectual horsepower in a rough kiwi sort of way. Interesting comment in a stuff article - she was highly though of overseas but oft criticised here in NZ. Says something for NZ psyche.

Shares dipped on result and resignation news.

The top line is the important number with Telecom because growth has historially proved hard to get outside of spending hundreds of millions on new subsidiaries. At +2.6%, revenue growth is negative in real terms.

I don't think TG has done a bad job at meeting TEL's objectives. The announcement appeared to say she wouldn't be getting a place on the board. They should have followed this plan last time. Personally I think the previous CEO chose his exit time well and that TEL was doomed to below average performance on the strategies it had already pursued. The board seems to have got off quite lightly in this regard - TG just executes strategy. The board sets it.

TEL should have invested in fibre and technology upgrades before the government felt goaded towards being heavy handed. I feel this would have reduced criticism of our embarrassing technology gap with any country that does something more than grow bananas for a living. TEL would have also been able to create new revenues streams and augment the top line instead of reducing it's strategy to digging in the heels and cutting costs. 'Course this might have had a cost on dividend levels and as we've seen over the years from NZ's yield obsessed market, it appears we'd rather have 5% cash than 6% growth.

The Powertel acquisition at least appears to make some sense although doesn't appear to be a bargain. The problem is why it makes sense in the first place. Around $2b dollars later perhaps shareholders will finally see some results. Nothing that will pay their 5% though.

Selling directories for a high price is a seductive strategy. But shareholders should remember there is a reason why high prices are being attributed to this style of asset. Given Telecom themselves believe both broadband and mobile is about content for value added revenues, it's interesting they should opt to sell the one and only seriously profitable source of content. If they are worried about search (and they are probably right to be), a joint venture with a search company would seem far more sensible?

Bling_Bling

03-02-2007, 07:54 AM

Where is the growth for TEL?

duncan macgregor

04-02-2007, 01:56 PM

Steve

04-02-2007, 03:53 PM

quote:Originally posted by duncan macgregor

Now that she is going with the day of judgement around the corner, in hindesight was she good or a disaster for the company?.
1, Did she earn her huge salary?.
2, Is the sp higher or lower allowing for inflation since she took the reins?.
3 Did she make many stupid decisions during her time, and is the company profile up or down from her start to the finish?.
I think the lady was a complete disaster the company is very much the worse for her input. MACDUNK

I tend to agree with MACDUNK. It appears that TEL dropped the ball while TG was in charge. Did I read somewhere that TEL missed the opportunity to negotiate the sale of the 'copper wire' back to the Government for a price, because they were concerned with trying to delay the loss of their monopoly? Ultimately, loosing the 'copper wire' cost shareholders how much in value???

metro

04-02-2007, 05:25 PM

The lady was a complete disaster for TEL and particularly the TEL share price.

metro

04-02-2007, 05:50 PM

rather than investing in PowerTel in Australia, would TEL not be better to invest in infrastructure in the metropolitan towns and cities in NZ?

A 1950s POTS network doesn't cut it, with me, anyway

Steve

04-02-2007, 05:55 PM

quote:Originally posted by metro

A 1950s POTS network doesn't cut it, with me, anyway

Out of interest, how does someone find out what sort of network is in their area?

metro

04-02-2007, 07:34 PM

Steve: u live in Dunedin, you do not have cable TV (unless you have a Sky dish), your Broadband is possibly quite slow =
dunedin has a 1950s type POTS network (as far as I know)

I've worked for Telecom, Im a past TEL customer for 20+ years and very well acquainted with this company but luckily now I live in a TelstraCLEAR 21st century network area and very pleased I am

Digital Cable TV
Broadband 10mbp/s upstream and downstream
Reliable phone service

StainlessSteelRat

05-02-2007, 07:03 AM

quote:Originally posted by Bling_Bling

Where is the growth for TEL?

A good question. IMO, TEL is going down the wrong path - they should see themselves as a competitor to SKY not a partner.

For instance, if they were to beef up their infrastructure they could easily provide video over the Net to all NZ homes. This would allow them to bid for the rugby hosting rights to the S14/All Blacks. They could then offer a packaged solution Net/Video for about $80-120 a month.

That is where REAL growth would come from, but like the opportunity they had to buy Trademe, their strategists are so adept at dropping the ball, it's unlikely to happen.

hairdresser

05-02-2007, 07:59 AM

Its good to see TEL investing in a country with a regulatory environment for telco's conducive to competition and growth rather than in NZ. There is no real point in investing in NZ as they already have dominant market share and can make huge money by tweaking the assets they they already own. Investing in NZ telecommunications market and taking the risk of the regulators handing over the assets to competitors would be like gifting cash to competitors. Particularly with Vodafone trying to cut in to their landline and broadband market share and also with SkypeIn. TEL are not a charity to help undercapitalised competitors.

Deev8

05-02-2007, 11:16 AM

quote:Originally posted by StainlessSteelRat

... if they were to beef up their infrastructure they could easily provide video over the Net to all NZ homes.

Out of interest - do you have an estimate for the cost of the beefing-up required to do that?

barnsley bill

05-02-2007, 07:35 PM

quote:Originally posted by metro

rather than investing in PowerTel in Australia, would TEL not be better to invest in infrastructure in the metropolitan towns and cities in NZ?

A 1950s POTS network doesn't cut it, with me, anyway

And soon dorothy we will be back in kansas.

If the new CEO commits one dollar towards infrastructure he will be out the door so quick his little red shoes wont touch.
Who is going to spend shareholders money so people like Malcolm Dick can add a couple of metres to their yacht. The governments recent moves have ended infrastructure investment.
Enjoy your TelstaClear network and thank the shareholders who lost (and continue to lose) hundreds of millions of dollars giving it to you.
Would you put in a new kitchen if you were worried the council might bulldoze your house to give your neighbours (who rent) a better view?

Snoopy

06-02-2007, 04:02 PM

quote:Originally posted by Ptolemy

OK, I'll start off. Interesting there is no discussion on TGs resignation today - thought their would be a host of "good riddances".

ON TG I actually quite liked here - she was someone who spoke as she saw it and clearly had huge intelectual horsepower in a rough kiwi sort of way. Interesting comment in a stuff article - she was highly though of overseas but oft criticised here in NZ. Says something for NZ psyche.

Shares dipped on result and resignation news.

From a fly on the wall (or is that a bug on the receiver) at Telecom HQ:

Rod: Hey Wayne, it’s Rod here.
Wayne: But Rod, I thought you were – dead!
Rod: All reports of my death have been doctored! Congratulations on gaining the top swivel seat.
Wayne: Oh, you mean the Chair, thanks
Rod: I see you are at last getting rid of Theresa?
Wayne: That joker in the car that almost got her on the crossing by the Freyberg pool was a fool.
Rod: Who have you got lined up to replace her?
Wayne: It is not the ‘who’ that matters. More to the point is making sure whoever it is doesn’t do *quite* as good a job as everyone thinks they will. That’s the way to electrify the power of the chair, and it lets me really justify my salary!
Rod: You mean like the trick I pulled just before Theresa took over, when I gave her AAPT to deal with? It builds character to deal with a problem child and AAPT was a great learning experience for her. What have you done Wayne- do tell!
Wayne: Not ‘do tell’ Rod, ‘Powertel’. I just got that latest Australian purchase through after we gave Theresa the yellow card at last month’s board meeting. That will create a real headache for whoever replaces her!
Rod: Geez Wayne! ‘Pacific Star’ for me, AAPT for Theresa, and now ‘Powertel’ for the new boss!
Wayne: Mind the lingo Rod, I don’t understand your slang!
Rod: ‘Boss’ stands for ‘bum on swivel seat’.
Wayne: Gotcha, and thanks for all those years keeping *my* swivel seat warm.
Rod: You are very welcome. Rod out, but not down!

SNOOPY

Snoopy

07-02-2007, 03:45 PM

quote:Originally posted by Snoopy

IMO there is quite a bit more upside in the Telecom share price yet. Any entry price under $5 will be looking cheap in a few months time.

It is funny, I thought that when the announcements of TGs resignation came through, the share price would go up!

Never mind, the share price slump down to $4.80 or so triggered another one of my 'stop buys'. I didn't get the best price as I came on board with some more TEL shares at $4.86. Still with the price nudging $5 as I write this I am more than happy, albeit feeling a little naughty. Regular readers will know that I am already a bit overweight in TEL shares and I don't want my portfolio allocation to get too 'out of whack'. Nevertheless the value at under $5 for me is still compelling and I am expecting a capital return with the Yellow Pages deal which will bring my exposure back. I thought better get in now and catch a couple of dividends on the way through, and save the worry about when to buy more Telecom shares after I get my capital back.

$5.07 by the next ex-dividend date me thinks.

SNOOPY

discl: hold TEL

kura

07-02-2007, 04:25 PM

Hmm "A bit overweight" surely that is an understatement Snoopy ! I can only recall you ever posting on the TEL topic, so I presumed that was all you owned.

Given your preference for yield shares, would you be good enough to tell me what other NZ shares you own as I'm looking for a conservative home to stash some of my profits from ASX resource share trading (currently have KIP & VCT)

duncan macgregor

07-02-2007, 04:30 PM

Snoopy, you are still chasing your tail one day you will catch up and VOOMP :D:D. Try telling your stories to the people that bought into this dog the day this woman took over until day. Your dividends only count as treading water, look what will happen when they sell the yellow pages, whoops more to spend with less income. Give us the sp when she took over?, i cant be bothered to look it up. It was $9-00 something? today $5-00 something dividends in between? Less inflation. Give me a laugh i am interested to know. When you finish that tell us what the monkey and dart board did during that period. :D:DYour old mate havin a go at you MACDUNK

Major von Tempsky

07-02-2007, 05:37 PM

Duncan McGregor reminds me very much of those French and German generals at the beginning of WW2 - perfectly prepared to fight WW1.
Who cares about the dead and buried history?
I was never a fan of Madame Gattung, I'm happy she's going but so what? My criticism was based on her lack of relevant qualifications and lack of overall vision, I don't care whether she was male or female I'm quite happy to countenance another female as next CEO. The sorority apparently cut no ice with Helengrad.
I am more interested in the present and future not in wallowing in the past. Telecom is a very good income stock and I will be continuing to buy it for that reason while having a minor flutter with capital stocks.
The carping remarks on PowerTel are pathetic apparently made by people who never bothered to read the reasons for buying it and its background. Its profitable and and it has direct access bypassing Telstra. Can't they understand that simple English? Its a different animal from AAPT. Can't they understand that? Its also peanuts in terms of TELs size and cashflow. Find something else to grizzle about.
So the net profit only rose by 16% - what's wrong with that? Get a life.
If 10 private equity & outfits want to vastly overvalue Yellow Pages Division take the money and run and start up another one as British TEL did after it sold its one. Or concentrate on the other alternative for searching etc that TEL is in joint venture with Yahoo isn't it and the TEL Board is so excited about.
Some people can't see past the end of their nose.

Snoopy

07-02-2007, 05:40 PM

quote:Originally posted by kura

Hmm "A bit overweight" surely that is an understatement Snoopy ! I can only recall you ever posting on the TEL topic, so I presumed that was all you owned.

Given your preference for yield shares, would you be good enough to tell me what other NZ shares you own as I'm looking for a conservative home to stash some of my profits from ASX resource share trading

You could wait for Dr Bollard to raise interest rates and stick it in a term deposit Kura. You might find that hard to beat over the next few months.

If you want 'less conservative' than that, I am currently with PGW, TUA and RBD. However, there is some operating uncertainty with the latter two and I will be waiting for the next profit announcement from both of them before committing more funds myself. PGW I would be happy to accumulate on weakness, and I have been doing just that. But being a 'farming share' there are of course no guarantees there.

quote:
(currently have KIP & VCT)

Good shares. But from where I sit they are a bit expensive to buy more at the moment!

SNOOPY

Lawso

07-02-2007, 05:46 PM

Big increases in both TEL and TLS sps today. Why? I've heard no comment yet. Is it just general buoyancy in NZX and ASX or some reason specific to telcos?

craic

07-02-2007, 07:01 PM

Telecom is underpriced. They are still the principal players in a very lucrative market. Those who believe that they will collapse under the pressure of competition are dreamers. They have enough clout to screw the competition at every turn.

duncan macgregor

07-02-2007, 07:37 PM

quote:Originally posted by craic

Telecom is underpriced. They are still the principal players in a very lucrative market. Those who believe that they will collapse under the pressure of competition are dreamers. They have enough clout to screw the competition at every turn.
Draw a line at the sp a number of years ago to what it is today then tell me what they are doing to change the trend. $9-00 down to five dont forget the dividends for the fundies to add on. The monkey did better on the dartboard if you consider the rise in the market during that period.:D:D. macdunk

metro

07-02-2007, 08:21 PM

IRG have just re-rated this stock as a "Yield Buy" - certainly doesn't convince me to buy but might mean something else to someone else :)

Snoopy

07-02-2007, 11:26 PM

quote:Originally posted by duncan macgregor

Snoopy, you are still chasing your tail one day you will catch up and VOOMP.

Not at all. I am buying into the new Telecom, not the old one.

quote:
Try telling your stories to the people that bought into this dog the day this woman took over until day.

Give us the sp when she took over?, i cant be bothered to look it up. It was $9-00 something? today $5-00 something dividends in between? Less inflation. Give me a laugh i am interested to know.

Your memory is good Macdunk. The TEL share price on 31st March 2000 was $9.11. However my average buy in price is now $5.35. That is probably lower than most current shareholders due to my value averaging buy in strategy. Considering most of my shares were acquired just before the unbundling announcement I can't complain.

quote:
Your dividends only count as treading water,

Not true. The TEL dividend yield has been 30% above bank deposit rates for almost as long as I can remember.

SNOOPY

Major von Tempsky

08-02-2007, 07:32 AM

Expect its the old insider trading thingy, leaks from those in the know about the indicative bids for the Yellow Pages.
Too much to expect the moronic critics we have seen in the last days to read and understand the PowerTel acquisition and the 16% profit rise.

No one gets nailed for insider trading in NZ, the legislation is a joke in practice.
But heigh-ho, in this case I don't particularly care.
Just tell the rest of us how good the bids are.

Steve

08-02-2007, 08:03 AM

SIGH!

Big payday for Gattung (http://www.stuff.co.nz/3954419a13.html)
Departing Telecom chief executive Theresa Gattung is poised to collect a multimillion-dollar payout when she leaves the company in June.

But Telecom yesterday refused to divulge the size of any golden handshake.

duncan macgregor

08-02-2007, 08:40 AM

quote:Originally posted by Steve

SIGH!

Big payday for Gattung (http://www.stuff.co.nz/3954419a13.html)
Departing Telecom chief executive Theresa Gattung is poised to collect a multimillion-dollar payout when she leaves the company in June.

But Telecom yesterday refused to divulge the size of any golden handshake.
That must be why she is selling the family silver:D:D.
What a bunch of mugs we must be to allow this obscene behaviour to continue in our market. Share price down roughly forty pc since she took over. Three million a year plus a golden handshake that they are trying to hide. [V][V] macdunk
DISCL to wide awake to ever hold.

George

08-02-2007, 10:30 AM

Question. Where would the sp be if they had not bought AAPT?
Discl. Bought TEL in Aus yesterday as they appears to be strength off a rising support level.
George

kura

08-02-2007, 11:25 AM

quote:Originally posted by hiawatha

quote:What a bunch of mugs we must be to allow this obscene behaviour to continue in our market. Share price down roughly forty pc since she took over. Three million a year plus a golden handshake that they are trying to hide. macdunk

Most of the 40% drop in share price was due to the purchase of AAPT - a problem she inherited from her predecessor rather than one of her own making.
hiawatha

Fair enough that TG can't be blamed for AAPT, however isn't it interesting that no-one has actually said "yep, my fault, I stuffed up" While the decision may not have hers, I do recall her publicy supporting the move, with her arguement going something like " .. if we don't expand...we may as well just manage the bizz down into oblivion.." (near enough to actual words, memory is dim)

But what you can blame TG for, is the inept way she dealt with govt, leading up to the ULL decision ! (Remember the arguement about number of broadband connections ? )

Biggest threat I see to TEL is more of the "aggressive growth" story, some of recent reports attributable to Mark Bogo...... say that this is still on the agenda.

Deev8

08-02-2007, 11:27 AM

quote:Originally posted by duncan macgregor

quote:Originally posted by craic

Telecom is underpriced ... Draw a line at the sp a number of years ago to what it is today ... $9-00 down to five

The share price several years ago has no bearing on whether or not it is undervalued today.

Deev8

08-02-2007, 12:00 PM

quote:Originally posted by Tom Hall

Dean was very enthusiastic about arguing that the Government, couldn't remove Telecoms property rights. Is there any point in the MD getting into a fight with the board?

It was poor practice allowing the ex-CEO (Roderick Deane) become Chairman of the company in the first place. Some of Telecom's problems have been as a result of that decision.

Steve

10-02-2007, 08:45 AM

With Telecom intent on selling their cash generator, it must be positive that they are at least getting top doller for it...

Telstra exits scramble for Yellow Pages (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10423271)
Telstra is out of the running to buy Telecom's Yellow Pages Group, leaving the way clear for private equity to take over the directories business.

Telstra confirmed yesterday it was no longer a bidder for Yellow Pages.

"Telstra is no longer interested. The price was much higher than we believe the asset was worth and the fact that Telstra stayed until the final round means we know the successful bidder has paid too much," said Telstra spokesman Rod Bruem.

Steve

14-02-2007, 07:23 AM

The yellow pages race is down to 4...

F1 owner, 'barbarians' on directory list (http://www.stuff.co.nz/3960834a13.html)
Telecom put Yellow Pages on the block in November and its adviser, investment bank Goldman Sachs J. B. Were, trimmed up to 10 initial bidders to a short list of four on Friday.

This list is believed to include CVC Asia Pacific, a buyout firm whose previous purchases include the Formula One Group and Italy's Yellow Pages, Seat Pagine Gialle.

Sydney-based Pacific Equity Partners (PEP), which owns Griffins Foods, Tegel Foods and Whitcoulls, is also in the mix. PEP is bidding with Bain Capital, a US private equity operator with even deeper pockets.

Hong Kong-based CCMP Capital Asia, which bought the late Michael Erceg's Independent Liquor ready-to-drink empire in partnership with PEP for $1.25 billion in December, has also made the short list.

Kohlberg Kravis Roberts & Co, the American private equity behemoth best known for its 1988 $US31.4b ($NZ46b) leveraged buyout of conglomerate RJR Nabisco, is also thought to be on the list. That deal led to a book, Barbarians at the Gate: The Fall of RJR Nabisco, and a film of the same name.

duncan macgregor

14-02-2007, 12:04 PM

Its what they do with thhe money that counts. I suspect they will copy RBD and spend it on an overseas pie in the sky project then come home with their fingers burned.[V] macdunk

BRICKS

14-02-2007, 04:17 PM

quote:Originally posted by duncan macgregor

Its what they do with thhe money that counts. I suspect they will copy RBD and spend it on an overseas pie in the sky project then come home with their fingers burned.[V] macdunk

THEY COULD/SHOULD give it to you and bet we would never see you AGAIN.. [8D]

duncan macgregor

14-02-2007, 04:23 PM

quote:Originally posted by BRICKS

quote:Originally posted by duncan macgregor

Its what they do with thhe money that counts. I suspect they will copy RBD and spend it on an overseas pie in the sky project then come home with their fingers burned.[V] macdunk

THEY COULD/SHOULD give it to you and bet we would never see you AGAIN.. [8D]
BRICK I thought we were friends?. What have i said to deserve your scorn[?][:o)]. Your old pal macdunk

Major von Tempsky

15-02-2007, 02:22 PM

Only one reason.
To prove Duncan McGregor even further wrong.
Presumably there's some more insider trading leaks on the Yellow Pages and the overhasty scribes are doing a rethink on the PowerTel buy.

duncan macgregor

19-02-2007, 11:02 AM

quote:Originally posted by Major von Tempsky

Only one reason.
To prove Duncan McGregor even further wrong.
Presumably there's some more insider trading leaks on the Yellow Pages and the overhasty scribes are doing a rethink on the PowerTel buy.
MVT Macdunk is quite capable of being wrong infact there is a macdunk got it wrong thread[:I]. When TG took over the reins of TEL the sp was over $9-00 down to five now, or near enough. If you add the dividends on to todays sp over that period, it means that they have used your money for a nil or loss return. The next thing that this woman is about to leash on the uninformed share holders, is to sell a very profitable part of the business to buy into Australia.
I expect a blip in the sp when this happens, the lady will come out with a bag full of your money smelling like roses when she leaves. In business you keep the best bits, and sell the worst bits, you should know that. With its last little foray into Australia to go by, i think you will need all the luck in the world.:D:D:D

Steve

20-02-2007, 07:56 AM

I am no longer a TEL customer having just signed everything to IHUG.

The whole process has been quite frustrating with TEL cutting bits off and taking days to allow IHUG to put the bits back on etc.

Still, IHUG could have warned that this is the usual happening instead of saying that everything will come across at once.

kura

20-02-2007, 10:03 AM

Where do you live Steve ? and what type of services do you have ?

I'm waiting for number portability before making any move (I'm centralish Auckland) I also run a smallish bizz from home & can do without the hassle of changing numbers.

Steve

20-02-2007, 11:07 AM

quote:Originally posted by kura

Where do you live Steve ? and what type of services do you have ?

I'm waiting for number portability before making any move (I'm centralish Auckland) I also run a smallish bizz from home & can do without the hassle of changing numbers.

I'm in Dunedin. My services are a base line rental, voice mail and faxability. I also have a home-based office.

The base line changed over ok, but there was about a week without voice mail and fax (the fax does have a seperate number on the same base line ie:faxability) which was a major hassle.

All the numbers have remained the same so no issues there.

My internet has always been IHUG and my mobile has always been Vodafone. With Vodafone and IHUG hooking up, everything is now (almost)under the same roof.

barnsley bill

20-02-2007, 05:40 PM

quote:Originally posted by Steve

quote:Originally posted by kura

Where do you live Steve ? and what type of services do you have ?

I'm waiting for number portability before making any move (I'm centralish Auckland) I also run a smallish bizz from home & can do without the hassle of changing numbers.

I'm in Dunedin. My services are a base line rental, voice mail and faxability. I also have a home-based office.

The base line changed over ok, but there was about a week without voice mail and fax (the fax does have a seperate number on the same base line ie:faxability) which was a major hassle.

All the numbers have remained the same so no issues there.

My internet has always been IHUG and my mobile has always been Vodafone. With Vodafone and IHUG hooking up, everything is now (almost)under the same roof.

You are still with telecom steve. I hug are simply rebilling this service

hairdresser

24-02-2007, 06:05 PM

I'm with Woosh its great, cheap and portable.

Download around 1Mbps local and 400-600kbps international. 20GB data cap and cheap calls.

Cheers

The BOWMAN

25-02-2007, 11:42 PM

quote:Originally posted by hairdresser

I'm with Woosh its great, cheap and portable.

Download around 1Mbps local and 400-600kbps international. 20GB data cap and cheap calls.

Cheers

Well I am with Telecom go large, download around 2Mbps, no data cap. Absolutely free from Dec 06 to now. :D:D

By the way, my friend uses Woosh and apparently when the internet is out, the phone is out too so he couldn't even ring up the help desk to ask what is going on. That's bad! [8D][8D][8D]

kura

26-02-2007, 09:27 AM

quote:Originally posted by The BOWMAN

[quote]Originally posted by hairdresser

Well I am with Telecom go large, download around 2Mbps, no data cap. Absolutely free from Dec 06 to now. :D:D

Credit where credit is due, while I usually badmouth TEL for thier arrogance, it is nice to see them doing the right thing by their customers for once, when service isn't up to specifications.

hesiod

26-02-2007, 10:20 AM

The hew kinder friendly face of telecom. GET REAL !

This is more FUD (Fear Uncertainty Doubt). They knew from the start they couldnt deliver an unlimited to service to anymore than 10% of the population - and still went out and marketed it ferociously. I suspect if they are now going to rely on Layer 7 rate limiting, that I believe is the term for it, even that 10% is going to feel the bite.

Leopard and spots ...

kura

08-03-2007, 09:28 AM

I didn't bother copying the entire article, but I assume similar sentiment here ?

THE Fairfax Media chief executive, David Kirk, has labelled broadband in Australia "fraudband" because it is too expensive and slow.

"We've reached a situation where very few people can have access to any sort of broadband that will allow them to download a movie in less than 12 hours, so it's just not enough," Mr Kirk told a conference in Brisbane yesterday.

Mr Kirk's comments came as the Government confirmed it would spend $162.5 million to subsidise broadband for consumers, regardless of where they lived.

Deev8

16-03-2007, 06:40 PM

Paul Reynolds, the head of British Telecom's wholesale unit, has been suggested as a likely replacement for Theresa. An article in The Herald today said:
Reynolds, 49, has driven fundamental change as the head of the wholesale division of British Telecom and is seen as an ideal candidate to head Telecom because he has overseen British Telecom's wholesale unit since the company voluntarily split in 2005.

The article is here:Briton tipped for Telecom top-job shortlist
(http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10429054)

peat

11-04-2007, 11:07 AM

Well I got a credit on my bill due to the Go Large Plan cramping my speed. (I knew it was the cause because I had been gettting much faster speeds prior to conversion to that plan)
Speeds are relatively consistent now.

ABN AMro not too keen on the effects of the governments plans tho.

quote:Telecom - A slippery slope - The NZ government's
consultation document proposes structural separation
rather than operational separation. It separates certain
capacity decisions as well as operations. We believe it has
the potential to significantly inhibit Telecom's investment
performance. SELL

Snow Leopard

12-04-2007, 04:56 PM

Up 4% today, what is going on ?

tsb

13-04-2007, 05:24 PM

on the Herald site - maybe they think its game over or its just the start of more games

Telecom has signalled it is willing to sell its copper line network rather than face a proposed regulatory three-way split.

Chief financial officer Marco Bogoievski said that the model put forward in a Ministry of Economic Development (MED) consultation paper last week would make it harder for Telecom to compete and removed its incentive to invest.

Losing the copper wire network, which requires hefty upkeep, made for a "potentially simpler regulatory framework".

Telecom has been grappling with a Government order last May to make its network more accessible to rivals, in order to speed up the rollout of broadband.

The MED proposed Telecom be split into a wholesale business, a retail unit and an access network services unit, nicknamed "Netco" by Mr Bogoievski.

Telecom initially favoured a two-way split: retail, and wholesale which would include the network.

Today's suggestion went further than the MED's proposal and would be quicker, Mr Bogoievski said.

"...We think if you go down a structural separation path, downstream deregulation is a natural consequence, at a later date."

He said Telecom's incentive to invest stemmed from its vertically integrated businesses.

Once the retail business was separated "and you can't enter into any fixed commitments with the Netco any more, you lose a lot of your incentive to go out and build stuff...so the only way to get it right is to create pricing signals that drive that kind of investment."

"What we're saying is that what's proposed is like a halfhouse that could be the worst of all worlds, and you've got a choice: you go back to a much simpler form of separation or you push on and do a cleaner form of separation."

Mr Bogoievski rejected the notion that Telecom might deliberately take its time if forced to go the Government's way.

"We can't manufacture instantly 700 IT people, you can't undo the fact that we currently run a very integrated tight IT business so there's some practical constraints.

"It's not about resisting the Government's calls, it's just saying do you really want us to spent the next two to five years unpicking this, not delivering any new retail services or innovation in the market, given that we could end up with something that is almost certainly is not going to deliver the extra investment you guys are looking for."

Asked what Telecom might expect to receive from the sale of "Netco", Mr Bogoievski said analysts estimated it was worth $3 billion to $4b.

Earlier, Telecom chairman Wayne Boyd also said the plan was inconsistent with the desire of wholesale customers to see new regulated services in the market as soon as possible.

"Our principal concerns are that the consultation document released last week proposes a very complex form of separation that goes significantly beyond the (British) BT model, and in our opinion fails to address important questions around investment."

Telecommunications Users Association chief executive Ernie Newman welcomed the proposal to structurally separate the access network, describing it as "potentially a watershed for the telecommunications landscape".

"On the face of it there are several very important benefits for users compared to the current approach," Newman said.

Newman said severing the link between the network and Telecom's other businesses will provide certainty for future investment and access for rival telcos, plus reduce regulatory oversight.

"Nonetheless with proposals of this kind, the detail is crucially important. There is a huge amount of this to work through," said Newman.

Telecom planned to present a full submission on the MED white paper by April 27.

troyvdh

13-04-2007, 07:36 PM

....what a dog....always was...always will be....gee...this outfit is an embarrassment.....

Deev8

22-04-2007, 01:56 PM

Rod Oram writes in today's Sunday Star Times - The telco sector's gone loopy - now we all lose (http://www.stuff.co.nz/stuff/sundaystartimes/4034119a6445.html)

He says:

What started a year ago as a relatively clear-cut exercise to open up the local loop to even-handed competition has turned into a nightmare of hidden agendas, excess cost, excessive complication and long-running uncertainty.

If this continues, we'll all be the losers -consumers, companies and politicians alike. The sector will become so consumed by its drastic restructuring we won't get more investment, better technology, abundant services and cheap prices for some years to come. And we'll fall down the OECD's telecommunications rankings.

COLIN

22-04-2007, 11:43 PM

All you astute investors on this forum should be well out of TEL by now - surely even SNOOPY by this stage.

Snoopy

23-04-2007, 06:47 PM

quote:Originally posted by COLIN

All you astute investors on this forum should be well out of TEL by now - surely even SNOOPY by this stage.

Why on earth would you think that Colin? TEL is still the biggest cashflow generator in the country. Since we are almost on the anniversary of the start of this thread it might be time to put a few things into perspective.

There is no doubt there is still a lot of uncertainty out there. While most investors just throw their hands up in horror and 'get out', this isn't how I operate. As far as I am concerned the more uncertainty the better. It is uncertainty that makes other investors do silly things (like selling Telecom shares to me for around $4)- behaviour I can profit from. Even my most recent TEL purchases in February this year, at $4.79 equivalent, are looking good.

Far from looking to 'get out' Colin, I am actually looking to buy more TEL shares in the medium term based largely on their entrenched position as number one in the market and the strong cashflow that underpins their opewrations.

So moving on to some newsworthy specifics....

In the news today is the spat between Telstra and Vodaphone, regarding Telstra's resold Vodaphone mobile phone product. Telstra have also canned their own trial network in Tauranga. The only other wholesale provider that Telstra can turn to is Telecom. So this is all very positive for TEL shareholders.

Next we have the threat of Telecom selling their copper network. At this stage I still regard this threat as 'gamesmanship'. However, if the government was to legislate to make further Telecom investment in the network uneconomic then obviously a sale or partial sale to a consortium owned 'Netco' would make sense.

To sum up, the only argument I can dream up to sell Telecom would be fear of the unknown. Since I don't operate on 'fear', selling is so far from my mind it is completely off the radar.

SNOOPY

discl: hold TEL, and looking to buy more

duncan macgregor

23-04-2007, 07:24 PM

SNOOPY, My portfolio increased in value this year to 69% up since jan. It increased in value today by 5.64% if it wasnt for investors like you I would never be able to do it. Keep posting you have my undevided attention. :D:D:Dmacdunk
DISCL IGO, MCR,IGO, SMY, AGM, bought and sold SMM

skinny

23-04-2007, 07:38 PM

Soooo childish Macdunk.

Went long a CFD in telecom at 4.56 a bit over a month ago.
Up 85% on that position - I'm glad 'investors' like you fixate in crappy mining stocks and leave undervalued blue chips to the like of moi [:p]

tsb

23-04-2007, 07:41 PM

I think the whole deal is quiet perverted
Telescum withold capital expenditure on the loop, prefering to pay out dividends - then sell>
same as the rail system - assest stripped the dumped
And Air NZ incompetant managment bankrupted it and dumped it
and I am sure there are many more items of family silver stripped and dumped
Was this really what the members of the public wanted from the state owned infrustructure built up over so many years
Ruth Richardson's tribute to her country
nuff said

Snoopy

23-04-2007, 10:53 PM

quote:Originally posted by duncan macgregor

SNOOPY, My portfolio increased in value this year to 69% up since jan. It increased in value today by 5.64% if it wasnt for investors like you I would never be able to do it. Keep posting you have my undivided attention. macdunk
DISCL IGO, MCR,IGO, SMY, AGM, bought and sold SMM

What has all this got to do with Telecom? If I want to hear about nickel mining I will go to a nickel mining thread thanks. Your posts are becoming increasingly repetitive and tiresome.

I too can beat any historic return you put up, with the benefit of a few trades composed with hindsight.

You claim 'full disclosure' of all your share transactions in advance Macdunk. Yet you never mentioned the losses you took on trading PGW the last time around at the time. This is the first sign of a gambling addiction - you ignore your losses and focus only on your winnings.

You have now gambled all of your portfolio on some projected advance in the world nickel price. It doesn't matter whether you are right or not in the end. The fact of the matter is, the risks you are taking are absurd. Of course you have not quantified these risks because you 'see no downside'. Even if you are right 'this time', it is only a 'matter of time' before your 'all in one bucket strategy' will wipe you out. Why have four nickel stocks when you could simply sell the worst three and put all of your money into the best one? Remember, a stop loss strategy will save you every time - except the last time!

You need to take a long cold shower Macdunk. Every topic header on this forum and other forums has turned into an outlet for you to spread your financial pornography on nickel prospects. You have become obsessed. The investment universe is about far more than nickel. Please try to post on topic during whatever limited investing future you still have left. I predict that your investment future will be measured in months if you continue on your current track.

SNOOPY

duncan macgregor

24-04-2007, 07:18 AM

quote:Originally posted by duncan macgregor

WINNER69, One little point that you missed out in your sums is the rise and fall in the dollar. TEL have had a lot of overseas investors buying in to a rising dollar then selling out at the top. I think other than that anyone caught holding this arrogant dog deserves very little sympathy. I think big changes at the top will come to late to save TEL which will continue to downtrend. macdunk
There you go SNOOPY thats what I said about TEL. Keep averaging down you will have plenty of opportunity very soon.
[:o)][:o)]:D:Dmacdunk

Snoopy

24-04-2007, 09:12 AM

quote:Originally posted by duncan macgregor

One little point that you missed out in your sums is the rise and fall in the dollar. TEL have had a lot of overseas investors buying in to a rising dollar then selling out at the top. I think other than that anyone caught holding this arrogant dog deserves very little sympathy. I think big changes at the top will come to late to save TEL which will continue to downtrend. macdunk

For sure you are right Macdunk, on the currency speculation. Perhaps this is a factor in the recent TEL share price rise?

Nevertheless I don't really care about speculators as my expected holding time for this share far exceeds any speculation cycle, which as a long term investor I don't have to predict. I merely react (by buying shares) when the share price dips as a result and all the time I am adding to my dividend 'freight train'.

SNOOPY

Major von Tempsky

24-04-2007, 05:07 PM

MacDunk continues to analyse TEL in emotive subjective terms.
"This arrogant dog".
I would have expected some objective analysis of the gross dividend yield, the p/e, the expected future p/e, the breakup value per share under various scenarios, the possible future path of TEL/AAPT/PowerTel and potential purchases of more small players in Australia.
All sadly lacking from MacDunk's diatribe.
Like Paul Budde, the "independent" telecoms "analyst" in Australia (always good for an immediate off the cuff quote to any media) one rapidly gains the impression that he once missed out on a job at TEL and has been trying to get even ever since, to the detriment of his credibility....

Deev8

24-04-2007, 06:12 PM

quote:Originally posted by duncan macgregor

I think big changes at the top will come to late to save TEL which will continue to downtrend. macdunkThe downtrend from $4 over the past eight months provides more than ample evidence?

duncan macgregor

24-04-2007, 06:45 PM

quote:Originally posted by Major von Tempsky

MacDunk continues to analyse TEL in emotive subjective terms.
"This arrogant dog".

WOOF WOOF :D:D[:p]How is that for describing a dog MVT. MACDUNK

Nevl

25-04-2007, 01:59 AM

Hmm Macdunk doesm´t like TEL. Thats going on the watchlist for sure. Just need the Doctor to say he doesn´t like it and it will become a raging buy.

Deev8

26-04-2007, 11:50 AM

NZ Herald 26th April: Rivals reveal Telecom fear (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10436176)

Telecom's rivals are worried that local loop unbundling - the reason competitors called for more regulation - is being swamped by debate on how the telecommunications giant should be split up.

Several will raise the issue when they make submissions tomorrow on the split-up plan.

D_Pick

26-04-2007, 02:12 PM

Telecom will need to spend up big on infrastructure in Australia to protect its investments there imo.

Anyone seen today's announcement from Telstra. Telstra are laying some pretty impressive foundations going forward, and investing serious money at the same time.

quote:https://www.directbroking.co.nz/DirectTrade/dynamic/announcement.aspx?id=1581829

quote:"Today we unveil Telstra's world-leading national IP network - the Telstra Next IP(TM) network," Mr Trujillo said. "The core of the network has been completely rebuilt.

"The Telstra Next IP (TM) network is the latest achievement in Telstra's five year transformation - giving businesses in both metro and regional areas more possibilities, more convenience and more control over their businesses.

quote:Telstra Enterprise and Government Group Managing Director, Mr David Thodey, said the Telstra Next IP(TM) network would significantly improve productivity, sales, profitability and reduce business costs for Australian businesses, putting Telstra light years ahead of its competitors.

beacon

27-04-2007, 05:00 PM

How much of this really is nails in Tel Oz's coffin, and how much propaganda.

kura

27-04-2007, 05:21 PM

quote:Originally posted by beacon

How much of this really is nails in Tel Oz's coffin, and how much propaganda.

Can't answer that one Beacon, all I can see is that biggest historical value destroyer of TEL is their bottomless pit in OZ (yep even more than the losses inflicted by Helen) and biggest danger for them going forward, is that they throw good money after bad.

My memory is getting dim, whatever was the catalyst for the share price to plummet below $9 several years back ??

Disc: Sold my IIN shares (went up on TEL takeover speculation)

beacon

28-04-2007, 07:55 AM

Strangely kura, I perceive Power Tel to be a step in the right direction, and their decision to stay in Oz gets another tick from me, even though they hastened into AAPT overpaying and bungling their entry.

wsheridan

02-05-2007, 06:36 PM

I am very surprised there is not a lot more chat about our largest stock at a time when it is in the news bigtime.

Is noone traing the margins?

duncan macgregor

02-05-2007, 07:19 PM

quote:Originally posted by wsheridan

I am very surprised there is not a lot more chat about our largest stock at a time when it is in the news bigtime.

Is noone traing the margins?
sorry about that been to busy counting my profits on the nickel train. AGM up 9.2% today:D:D:DMACDUNK

craic

03-05-2007, 09:43 AM

What's it all about Alfie?

Snoopy

03-05-2007, 12:32 PM

quote:Originally posted by wsheridan

I am very surprised there is not a lot more chat about our largest stock at a time when it is in the news bigtime.

Is no-one trading the margins?

The margins as the share price bounces between $4.80 and $5 you mean? I don't trade myself, but even so, I would have thought there were a lot better trading opportunities around than that!

SNOOPY

Major von Tempsky

03-05-2007, 12:46 PM

I'm more interested Snoopy's calculation of how much per share TEL shareholders will get back in late November.
How bout it Snoopy?

duncan macgregor

03-05-2007, 12:49 PM

quote:Originally posted by Snoopy

quote:Originally posted by wsheridan

I am very surprised there is not a lot more chat about our largest stock at a time when it is in the news bigtime.

Is no-one trading the margins?

The margins as the share price bounces between $4.80 and $5 you mean? I don't trade myself, but even so, I would have thought there were a lot better trading opportunities around than that!
SNOOPY
There are a lot better investing opportunities as well SNOOPY. TEL have just sold one of its best profit making divisions.
The big worry is will they squander the money on an overseas trip to Australia. It looks all down hill to me. MACDUNK

Snoopy

03-05-2007, 04:03 PM

Now, back with my investor's hat on.

I have been studying the 3/4Y2007 result.

A $1.1bn capital return is equivalent to a capital return of some 55cps, based on the number of shares around today ( I hope that answers your question Major). When that happens in September it will help correct my overweight (by design) portfolio position in Telecom. Excellent!

The Australian side of the business is still a mess, as expected. But the appointment of Paul Broad, former CEO of Powertel, is positive. That means that Powertel has effectively taken over AAPT, even if the financial transaction records show the takeover went the other way around!

New Zealand operating revenue, up only 1.1% for nine months, is disappointing. That increase is below the rate of inflation. But when you consider that 'relative decline' corresponds to a period when fixed to mobile rates declined, and where the business broadband cost was brought into line with what the residential customer is now paying (about time too, although I confess I never realised there was a significant difference) it makes the small overall increase in revenue easier to understand. The difference in broadband revenue alone ($26m in nine months) must almost all be coming off the bottom line of the company!

Speaking of 'bottom line', the nine month net profit (excluding abnormals) of $699 (I am including the Yellow Pages Group within this result) means that the last quarter result will come in between $121m and $161m. That is if Telecom's overall projected profit for FY2007 of between $820m and $860m, as forecast in their 2006 annual report (p51), is accurate. I find it hard to imagine how Telecom can engineer a normalised result as low as $121m to $161m for Q4, but we shall see!

Did I say 'engineer a result'? Yes! I expect given the current climate Telecom won't want to appear to be doing wonderfully well. It would cetainly be a good negotiating tactic to lower expectations while negotiation with the governmnet is at a delicate stage. It is possible that the FY2008 result won't be too flash either as the new CEO clears the skeletons in the closet, all in the best interests of making his own future performance look better!

One way to 'engineer results' is to bring forward or defer capital spending. Capital spending is forecast to be $851m for FY2007 verses $NZ751m for FY2006. Based on an average seven year life for these 'new capital assets', that means extra depreciation will be $100m/7=$14.3m per year. So ongoing profit has been reduced by $14.3mx0.66= $9.4m per year for the next seven years compared to the 'constant capital spending' scenario. Thre are other ways to reduce profits in the short term. Throw in a few multi-millions into an extra advertising promotion and you are there! And finally selling the yellow pages division is a master stroke in making the headline profits less (while keeping a near constant earnings per share as a result of the buyback).

In summary, whatever profit noises you hear from Telecom over the next twelve months, it will be done IMO to placate the government and a restless vocal section of the public. Undereneath it all Telecom will be doing just fine - as will be revealed in FY2009!

SNOOPY

discl: hold TEL

Snoopy

03-05-2007, 07:11 PM

quote:Originally posted by Snoopy

Speaking of 'bottom line', the nine month net profit (excluding abnormals) of $699 (I am including the Yellow Pages Group within this result) means that the last quarter result will come in between $121m and $161m. That is if Telecom's overall projected profit for FY2007 of between $820m and $860m, as forecast in their 2006 annual report (p51), is accurate. I find it hard to imagine how Telecom can engineer a normalised result as low as $121m to $161m for Q4, but we shall see!

Ooops apparently the profit target for Telecom is now $870m to $890m according to statement Marko Bogoievski 'confirmed' to the media today. If so that is deeply impressive, especially if it excludes the final quarter of profit from the Yellow pages division (sold at the end of March). I wonder when the profit outlook was upgraded? I don't recall any such upgrade!

75% of earnings, the declared dividend rate, amounts to $653m to $668m. Spread over 1,960m shares, that equates to an annual dividend of 33-34cps. With 21cps paid out during the year, that leaves the fourth quarter payout at 12-13cps. At a market price of $4.87, Telecom are currently on a gross dividend dividend yield of 10.4%! And that isn't counting any capital return. That makes the price earnings ratio is an undemanding 10.8. Sure profits are expected to reduce next year, but even so.....

I think I just made the Major's day.

SNOOPY

discl: hold TEL

beacon

04-05-2007, 12:52 PM

I hope Broad delivers Snoopy, cos I think Tel overpaid for PowerTel too. Meanwhile, Theresa has been quoted saying in the Australian "there is a train wreck coming". Also restructing/ regulation costs continue to whittle away profits. While I appreciate Boyd's stance, Labour won't let go of the dog bone. Watching this space with a longer timeframe, longer than the impending capital return kaleidoscopic view ...

Deev8

04-05-2007, 06:02 PM

quote:Originally posted by duncan macgregor

The big worry is will they squander the money on an overseas trip to Australia.They might blow it all on Nickel mining investments.[:0]

duncan macgregor

04-05-2007, 07:33 PM

quote:Originally posted by Deev8

quote:Originally posted by duncan macgregor

The big worry is will they squander the money on an overseas trip to Australia.They might blow it all on Nickel mining investments.[:0]
They are not that smart. Macdunk:D:D:D:D

neopole

04-05-2007, 07:39 PM

and in the meantime...........
broadband is lacking massively in investment............

kura

22-05-2007, 12:30 AM

My mum is the proud owner of an old prepaid 025 phone, she uses her phone in case of an emergency when she is out on her mobility scooter, (ie if she gets stuck somewhere) (She had a stroke, albeit mild, that limits her walking ability) I wonder if dear TEL will be offering to give her a replacement phone with a transfer of her unused prepaid credits ? I only "twigged" to the situation, when mumsy asked if I could get a new battery for her, as her old one wouldn't hold it's charge for long.

Yep, you got to love the incompetence of the TEL PR machine, and how it's just playing into the hands of Helen and her co regulators/conspiritors.

777

22-05-2007, 10:36 AM

Come on Kura. Telecom advertised long enough of the demise of the 025 system. It is the responsibility of the user to as to how he/she uses the phone. You would not load up a prepaid phone for more than you could use when it was known to be winding down. They made plenty of offers at the time for alternatives including transferring the balance to a new phone. So the fact that you did not take up the offer is your problem not Telecoms. But then it is easier to bag Telecom.

COLIN

22-05-2007, 02:22 PM

quote:Originally posted by 777

Come on Kura. Telecom advertised long enough of the demise of the 025 system. It is the responsibility of the user to as to how he/she uses the phone. You would not load up a prepaid phone for more than you could use when it was known to be winding down. They made plenty of offers at the time for alternatives including transferring the balance to a new phone. So the fact that you did not take up the offer is your problem not Telecoms. But then it is easier to bag Telecom.

777, a rather insensitive reaction to the plight of a frail old lady in a mobility scooter, don't you think?!

777

22-05-2007, 02:41 PM

Colin she was not the one having a whinge. It was her son/daughter. If he/she ever rung her they would have known she had an 025 number. He/she probably even bought the phone for her. But all we hear are moans against Telecom on this forum. Some are justified others are not. I just could not let it pass without some comment.

Disc. I don't work for Telecom. I also had an 025 phone which I never bothered to replace as I can do without a cell phone.

Deev8

28-05-2007, 11:34 AM

Article in today's New Zealand Herald Telecom offers aid on new network (http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10442109)

Telecom's wholesale division is throwing open the doors this week in what it says is a bid to help its phone company customers plan for the future ...

Snoopy

08-06-2007, 09:00 PM

An important announcement from Telecom today on their share buyback.

"If approved, the proposed Scheme of Arrangement would cancel one in nine ordinary shares on a pro-rata basis in exchange for NZ$4.88 for each cancelled share. Based on the current indicative timetable it is anticipated that the capital return will be completed in October 2007."

The are 1,961m Telecom shares on issue. Cancelling one in nine of those means approximately 218m shares will be cancelled. At a $4.88 share cancellation price, that means a potential capital injection of around a billion dollars into the NZ market before October.

I am after my own share of that billion. But rather than wait until October to spend it (which is when I will be competing with everyone else), I have stocked up on a few more Telecom shares today at $4.65. Yes, I know I said I was going to waiting until TEL hit $4.40 before buying. But my purchase today was just an insurance policy, in case TEL doesn't get there.

And in response to Phaedrus's comments on the SKL thread

"Look at poor Snoopy buying TEL every time it dropped below $6.30 - on the basis that it was "cheap" at any price below his estimate of its "fair value". Unfortunately the market did not agree and the downtrend continued taking TEL to less than $4 before it ended and reversed. Read all the gory details in the "TEL chart TELIUA, maximising yield" thread."

All those purchases I made of TEL around $6 was before local loop unbundling was announced, Phaedrus. That decision has obviously affected the value of Telecom although not by as much as the market thinks (IMO).

Also Phaedrus, aren't you on record as saying that you don't trade Telecom because you can't find any market signals the share generates that are reliable enough after doing the backtesting? If I'm wrong please enlighten me on any indicators you have subsequently found to be sufficiently reliable. I seem to remember I threw some possible reasons for the 'stray indicators' at the time. The most memorable being that Telecom is often used as a proxy for the New Zealand dollar and so it doesn't behave as if it were driven only by company events. Funnily enough though, 'after the event' all of these 'market signals' suddenly become 100% reliable!

Without the benefit of hindsight, I still stand by my original decision to stock up on Telecom at $6. If the story ended there, perhaps you might have reason to feel sorry for me. But you left out the next chapter in my Telecom investment saga Phaedrus didn't you? I subsequently bought the biggest helping of Telecom shares that I have ever bought at just above $4, during the downtrend when some of the vocal bears were suggesting $3 was inevitable. And I have bought more since. And of course since I bought my Telecom shares at $6 I have received dividends to the extent of 96cps. No that isn't a misprint. Almost a dollar's worth of dividends in under two years, with a large capital repayment still to come!

So no need to feel too sorry for me. It would quite suit me if the TEL share price were to fall further as I do intend to buy more. But we can't always get what we want!

SNOOPY

discl: hold TEL, and looking to increase my stake.

Phaedrus

09-06-2007, 11:18 AM

"Phaedrus, aren't you on record as saying that you don't trade Telecom because you can't find any market signals the share generates that are reliable enough after doing the backtesting?"
True. That's why I don't trade TEL. That has never stopped me investing in it as a medium/long-term trend-follower, though. I don't use oscillators or any other indicators that are optimised or backtested. I monitor nothing but price, trend and volume as per the chart below.

Snoopy, I have always claimed that your big mistake is that you persist in buying stocks when they are in a downtrend. This is not because you are ignorant of this unfortunate fact - you actually seem to be perversely proud of such timing! "Notice that each of my four tranches of shares has been purchased in a downtrend" (Bought at an average of about $6.) Two years later, these positions are STILL underwater in spite of the handsome dividends! Over the same 2 year period, you could have made around 40% in an Index fund and around 100% on perfectly ordinary stocks like IFT, FBU etc. With dividends on top! You would have done better leaving the money in your pocket! Please don't start talking about the unfortunate influence of the unbundling announcement. TEL was in a clear downtrend well before the news broke - all that did was accelerate the pre-existing downtrend. I am of course well aware that you continued to buy TEL all the way down during the 18 month downtrend and that not all of your positions are in the red. That does not alter the fact that you would have done much better being totally out of TEL all that time, delaying your entry until the downtrend had ended and there was some indication that an uptrend had begun. TEL is again in a downtrend and again you would be better off out, sitting on a pile of money ready to buy in again when the current downtrend ends.

I'll say this for you Snoopy. You are consistent. Ever true to form, now that TEL is again in a downtrend - you are buying! The time to buy TEL was around Sep/Oct last year when it had stopped falling and had started to rise, not before then when it was still falling and not now when it is falling again.

You say "It would quite suit me if the TEL share price were to fall further as I do intend to buy more" Let's say you wanted to increase your TEL holdings by 10% if the price fell further. Each $1 you save on this new purchase will have cost you $10 in losses made on the rest of your holding!

You pretend that an ongoing downtrend is something you would welcome :- "It would quite suit me if the TEL share price were to fall further......But we can't always get what we want!".

Snoopy, you sound like a turkey hoping for Christmas!

http://h1.ripway.com/Phaedrus/TEL69001.gif

duncan macgregor

09-06-2007, 12:49 PM

quote:Originally posted by Snoopy
Without the benefit of hindsight, I still stand by my original decision to stock up on Telecom at $6. If the story ended there, perhaps you might have reason to feel sorry for me. But you left out the next chapter in my Telecom investment saga Phaedrus didn't you? I subsequently bought the biggest helping of Telecom shares that I have ever bought at just above $4, during the downtrend when some of the vocal bears were suggesting $3 was inevitable. And I have bought more since. And of course since I bought my Telecom shares at $6 I have received dividends to the extent of 96cps. No that isn't a misprint. Almost a dollar's worth of dividends in under two years, with a large capital repayment still to come!

So no need to feel too sorry for me. It would quite suit me if the TEL share price were to fall further as I do intend to buy more. But we can't always get what we want!

SNOOPY
discl: hold TEL, and looking to increase my stake.
SNOOPY, You know what I think of your investing strategies so no need for me to elabourate. What puzzles me is where do you find all the money to keep buying all your downtrending stocks?. I know that I have a certain ammount to invest, and normally sell one to buy another. Over the years you are on record as having averaged down on numerous stocks, but never a word about selling anything. You must have a money tree at the bottom of the garden to support your reckless investing style. :DMacdunk

Snoopy

09-06-2007, 05:13 PM

quote:Originally posted by duncan macgregor

SNOOPY, You know what I think of your investing strategies so no need for me to elabourate. What puzzles me is where do you find all the money to keep buying all your downtrending stocks?. I know that I have a certain ammount to invest, and normally sell one to buy another. Over the years you are on record as having averaged down on numerous stocks, but never a word about selling anything. You must have a money tree at the bottom of the garden to support your reckless investing style. :DMacdunk

'Never sell anything' apart from Carter Holt, BIL International, the Warehouse and the top I knocked off my Sky City holding you mean? I sold all of those in 2006, which is probably more than you sold Macdunk. But I'd better keep quiet as I'm beginning to sound like a trader! Also I tend to sell in chunks and buy in bites which may give the impression I'm selling more than I'm buying.

SNOOPY

P.S. Actually that is all a lie, I do have a money tree. Just send me a cheque for $1000 made out to 'Charlie's Ace Snoopy Hound' (that's CASH for short) to:

Snoopy ,
Round Headed Kids Yard,
Somewhere in Suburbia

and I will send you a cutting. No need to give me your return address. I'm telepathic and know it already.

Snoopy

09-06-2007, 06:33 PM

quote:Originally posted by Phaedrus

"Phaedrus, aren't you on record as saying that you don't trade Telecom because you can't find any market signals the share generates that are reliable enough after doing the backtesting?"
True. That's why I don't trade TEL. That has never stopped me investing in it as a medium/long-term trend-follower, though. I don't use oscillators or any other indicators that are optimised or backtested. I monitor nothing but price, trend and volume as per the chart.

Fair enough.

quote:
Snoopy, I have always claimed that your big mistake is that you persist in buying stocks when they are in a downtrend. This is not because you are ignorant of this unfortunate fact - you actually seem to be perversely proud of such timing! "Notice that each of my four tranches of shares has been purchased in a downtrend" (Bought at an average of about $6.)

It depends on the confidence you have in your own valuations Phaedrus. If you run the numbers well in advance it is then a matter of playing the waiting game. Waiting for the share price to come into your 'buy' range. Almost inevitably that means 'buying in a downtrend'. But the trend is largely an immaterial point in any 'value point' purchase. I don't chase downtrends. There are plenty of downtrends that I don't buy into (Tenon being the most recent example). Whether I buy TEL shares at $4.65 on the way down or $4.65 on the way up it doesn't matter to me as long term investor (except for low liquidity shares I am more likely to get the number of shares that I want in a downtrend). If I have predetermined that $4.65 for TEL is a good (albeit not a great) predetermined value point, then I will buy. Years down the track my ultimate profit will depend only the price I paid. Historic trends will be consigned to the wobbles of history that they are.

quote:
Two years later, these positions are STILL underwater in spite of the handsome dividends! Over the same 2 year period, you could have made around 40% in an Index fund and around 100% on perfectly ordinary stocks like IFT, FBU etc. With dividends on top! You would have done better leaving the money in your pocket! Please don't start talking about the unfortunate influence of the unbundling announcement. TEL was in a clear downtrend well before the news broke - all that did was accelerate the pre-existing downtrend.

IIRC Telecom was only in a downtrend if you ignored dividend payments. If the price drops 10c and you are paid a 10c dividend then your financial position has not changed. Include the dividend payments and Telecom was in a trading range.

Also it is IMO wrong to decouple any perceived downtrend that was happening 'before the unbundling announcement' with 'the process of telecommunications reform.' Telecom had been in talks with the government for some time and that was affecting the share price. To some extent my purchases at around $6 were bets *against* unbundling. The fact that they were (in the short/medium term anyway) 'losing bets', does not mean that without the benefit of hindsight I should not have taken the bets in the first place.

[quote]quote:
I am of course well aware that you continued to buy TEL all the way down during the 18 month downtrend and that not all of your positions are in the red. That does not alter the fact that you would have

Snoopy

09-06-2007, 06:42 PM

quote:Originally posted by hiawatha

This assumes that an instance of purchasing (or holding) during a downturn is in fact a loss, regardless of fundamentals. A dubious assumption I would think.
hiawatha

Holding shares at less than you paid for them *is* a loss hiawatha. The question is "do you have to do anything about it?" and the answer is no.

There is no need to 'swing at every pitch'.

It is exactly the same argument as buying a house for $500,000 then selling it the next day because the next person who comes along the street thinks it is only worth $450,000. If you don't agree with the next guy's valuation and you don't have to sell, then why sell?

SNOOPY

Halebop

10-06-2007, 10:26 AM

I think Buffett made better use of the baseball analogy. In his example, not swinging at every ball meant not buying every company that came along. No matter how much anyone twists the outcome - Telecom have not been profitable to hold over the last few years and have instead been more useful at demonstrating the folly of buying into down-trends.

Several times in these TEL threads (and a couple of other well known "Value" threads), posters have referred to dividends and their net financial position. Dividends are returns, like interest from a bank account would be. Over time dividends are what you expect back from a company. They are what makes a long term investment profitable. If your holding was to be permanent - dividends would be your only return. To include dividends in your calculations to justify being at break-even or not-as-bad-as-it-looks ignores that ideally an investment should both provide returns and at worst be capital stable (Although with inflation even the later is going backwards). Holding anything incurs an opportunity cost. So being at break even is clearly still a loss, particularly when benchmarks indicates you could be 40 or 50% above that figure.

Phaedrus

10-06-2007, 10:41 AM

I like your house analogy Snoopy. I feel a whole new set of investment rules coming on!

(1) Buy in an area where prices are rising.
(2) Make sure the property is fundamentally sound.
(3) Do NOT buy if the fundamentals are not good.
(4) Do NOT buy unless/until prices in the area are rising.

The value of your holding in Tel Street (or any other) is DIRECTLY affected by the sale price of adjacent properties. By buying into a street where prices are rising you all but ensure that your holding will appreciate in value.

Perhaps dividends could be viewed as being analogous to rental income. While they are a significant factor, they should not overshadow other considerations. There is not a lot of point making a good rental income if at the same time you are incurring a capital loss. Only a fool like MvT would say something like "Frankly I don't personally care what the capital value of this property is, it can go down to $10,000 if that's what the lemmings want, as long as the tenants keep paying their rent".

Phaedrus

10-06-2007, 12:26 PM

But Hiawatha, these are probably the same thing - the TA was simply reflecting the deteriorating fundamentals. You were not the only one that knew TEL was "losing, or on the point of losing, lots of moolah in Australia." This was public knowledge and would easily explain the downtrend.
Holding downtrending stocks costs you money whether you are cognisant of the underlying cause(s) of the downtrend or not.

hairdresser

10-06-2007, 02:20 PM

Phaedrus

How can you invest so dispassionately and without regard for the instrinsic value of NZ's national icon run by the pillars of our society.

After reading the learned Snoopys posts I wish I too had loaded up at $6.00 and I then would have the could take pride in averaging down, riding out the speed bumps like the brilliant directors, enjoying the thrill as Telecom invest more in Australia and milk profits from the local infrastructure.

I would almost feel embarrassed to take the 7% dividend [based on my buy in price] even though it is only 1% less than the OCR.

I hope the directors are able to engineer rise in the SP before exercising their options price. A share buyback before convrsion date would be a good idea....

Anyway more seriously

Are you still playing in the US markets. I had a bit of fun on Friday night I got caught in a short squeeze with AKAM, I shorted about 2 minutes beofre it got upgraded [talk about bad timing], it wasn't a pleasant experience, the buy line went vertical. It's the largest amount of money I have ever lost in 30 minutes... LOL.

The other stock I was long in more than covered the loss though [4x] so no harm done.

I'm starting refining my trading strategy and will be looking to slowly [and very cautiously] upscale my investments over the next few weeks.

PS My stats are winning trades 77%, losing trades 23%. The average winning trade $ value is 20% higher than the average losing trade $ value.

Cheers

Phaedrus

10-06-2007, 05:00 PM

I disagree with so much of what you say, Hiawatha, that I think we must reside on different planets!

"The point is whether one is necessarily losing money in holding a downtrending stock" Huh? Of course you are! You think you are making money? The longer the downtrend runs, the more you lose! The actual amount can be calculated to the cent! The only exception that I can think of is if you have perhaps made more in dividends than you have lost (so far) in the downtrend.

"Sometimes trends reflect changes in the fundamentals, and sometimes they don't" We can never know the countless reasons that contribute to the formation of a trend. We can theorise as to some of the bigger, more obvious ones, but that's all.

"Cognizance of the underlying causes is not the point." I'll drink to that! Something we agree on! You are making (or losing) money on a trending stock just the same regardless of whatever the underlying causes might be.

"The point is that it is the events themselves, ie LLU, investment in Oz, etc, that cause gains and losses, not trends" No no no! It is the market's perception of the effect of those events that affects prices. Keep in mind too, the fact that the market is very smart - cumulatively, it knows all that can be known about any particular stock. It is smart enough to anticipate the effect of likely future changes. Did LLU come as a complete surprise to you? Trends are caused by the market's valuation of a stock increasing or decreasing over a period of time. There may or may not be any identifiable events to help "explain" the trend, but it IS the TREND that causes gains and losses. Hold uptrending stocks - you make money. Hold downtrending stocks - you lose money.

"Despite the current downtrend to around $4.60, Telecom apparently consider their shares to be worth $4.88 each". Interesting, but not all that relevant. Regardless of any claim made by Telecom, it is the market that decides what TEL shares are really worth.

".......those trends would simply have been wrong". Hiawatha, the market is never wrong. It just is. Trends are never right or wrong. They simply plot the market's valuation of a stock. That's the real value, mind, not what you or I or Telecom think it "ought" to be.

Mick100

10-06-2007, 05:50 PM

quote:Originally posted by Phaedrus
Keep in mind too, the fact that the market is very smart - cumulatively, it knows all that can be known about any particular stock.

I have been following the discussion on and off for some time
My comment is a bit off topic but I just want to add my 2c to your comment (above) phaedrus in which you express your belief in EMH.
The promoters of efficient market hypothesis claim that both fundermental analysis and technical analysis are both useless at predicting future share prices. They claim that the only way to beat the average market return is by investing in riskier shares which should have higher returns. (that's from the textbook)

My own opinion is that markets value large cap shares more efficiently than small cap shares. Small cap shares get little analyst coverage by brokerage firms whereas large cap's have scores of analysts covering them. This is why I believe the EMH is somewhat valid for large caps but completly invalid for small caps.
.

winner69

10-06-2007, 08:47 PM

quote:Originally posted by hiawatha
I'm saying that thers is such a thing........
hiawatha

Hiawatha .... so what is the REAL value of TEL then .... based on fundamentals that is

Snoopy

10-06-2007, 11:18 PM

quote:Originally posted by Halebop

Several times in these TEL threads (and a couple of other well known "Value" threads), posters have referred to dividends and their net financial position. Dividends are returns, like interest from a bank account would be. Over time dividends are what you expect back from a company. They are what makes a long term investment profitable. If your holding was to be permanent - dividends would be your only return. To include dividends in your calculations to justify being at break-even or not-as-bad-as-it-looks ignores that ideally an investment should both provide returns and at worst be capital stable (Although with inflation even the later is going backwards).

I've got news for you Halebop. Company earnings are the only return. And for a company that pays out all of its earnings as dividends (and there are a few in New Zealand) then dividends *are* the only return.

To imply that dividends are 'to be expected' and so therefore should not contribute when judging the profitability of a potential investment is a ridiculous position to hold. This is like saying that on one hand after a dividend payout the money paid out to the shareholder 'should not be counted'. And on the other hand earnings retained within the company are the only 'real' investment earnings. Of course we all hope that management will spend their retained earnings wisely and grow the company business. But it is still possible to compound your earnings growth in a company that pays out all of its earnings in dividends. Just use your dividends to buy more shares! From an investment perspective there is *no difference* between earnings paid out and earnings retained and both need to be combined to measure of the success or otherwise of an investment.

A share price will only improve, in the long term, if the earnings increase and the discounted future value of those increased earnings is higher than what the market had judged as 'fair value' for those earnings (as reflected in the share price) previously. In the short term sentiment can drive share prices. But sentiment can suffer unpredictable reversals which can make no sense longer than a leveraged investor can remain liquid. I'm not suggesting that you can't make money on the ebb and flow of sentiment. I am suggesting it is a much higher volatility game and the longer you play it the greater the chance you will lose your shirt.

quote:
Holding anything incurs an opportunity cost.
So being at break even is clearly still a loss, particularly when benchmarks indicates you could be 40 or 50% above that figure.

Let's not tell untruths here. A break even is not a great investment result. But a break even is still a break even and not a loss any way you care to measure it. As for setting your 'benchmark' at 40-50%, well Buffett only made half of that over his career, so I guess he is a failure?

SNOOPY

winner69

11-06-2007, 07:05 AM

quote:Originally posted by hiawatha

quote: Hiawatha .... so what is the REAL value of TEL then .... based on fundamentals that is

I don't really know. Too much is unknown about the effects of LLU, the government's partitioning plan, etc. However, I suspect that other players in the market don't know either, and that therefore the market price is unlikely to be much of an indication. All I was doing was disputing Phaedrus' claim that the selling price of a share represents its value, and that one is necessarily losing money if one buys or holds in a downtrend.
hiawatha

Your latest argument seems to be supporting that the market price of a share IS ITS REAL VALUE .....

duncan macgregor

11-06-2007, 09:09 AM

What It all boils down to is, was this share worth holding from the time you bought to what it would sell for today. You then take the time period inflation figure into account, plus the increased gain of the market, and deduct that from the dividends paid. T G took the reins when the share price was almost double todays price, the market has nearly doubled in value, [rough mathematics]with inflation lets say at 3%. For any long time holder to say they have lost nothing either requires them to tell lies, or be totally and utterly stupid.
To average down [Martingail system in gambling double up on losses], its a very stupid way to save your first losing bet. Double a dollar 23 times it costs a million bucks to save your first dollar.
SNOOPY, MVT, and a few others look on this as being the way to go with dividends catching up on losses then saying I lost nothing in dollar terms. Anyone holding TEL shares or any other company shares for that matter is predicting that the company is better positioned than most to give an above average return in tomorrows market. TEL are well entrenched as my least likely buy today looking forward. Macdunk

Phaedrus

11-06-2007, 11:24 AM

You have chosen a particularly unfortunate example Hiawatha. As usual, I disagree with nearly everything you say :-
"The Pumpkin Patch price seems to be slipping.."
Seems to be? Nah! - it really, really, really is!

"...at the moment"
Huh???? I hate to break this to you, but it has been slipping for the last 6 months!

"...apparently as a result of a reduction in profits due to the rising kiwi"
Maybe, maybe not. For example, here is the opinion of Anna Naum from the PPL thread :- "Currency is not something new for exporters and the strength of the AU and NZD should have been positive for PP as it pays for product in USD." We can only speculate as to the reasons for the current downtrend.

"That profit reduction may be a good reason for selling. But the fact that the share price is slipping is not."
The proof of the pudding is in the eating Hiawatha. Those that sold because the share price was slipping got out at a MUCH higher price than those that sold on the profit reduction announcement. Have you sold yet? Don't tell me, let me guess! You are still holding because the current shareprice is below your estimate of PPL's worth! In the meantime, your PPL investment is down over a dollar per share this year. So far.

Anna Naum also noted that "Insiders have been selling this one for some time now." Insiders, Hiawatha. People that know more about PPL than you or I do. Your "valuation" of PPL can only be estimated from historical information that is in the public domain. How accurate can it hope to be?

Snoopy

11-06-2007, 11:42 AM

quote:Originally posted by Phaedrus

"The point is whether one is necessarily losing money in holding a downtrending stock" Huh? Of course you are! You think you are making money? The longer the downtrend runs, the more you lose! The actual amount can be calculated to the cent! The only exception that I can think of is if you have perhaps made more in dividends than you have lost (so far) in the downtrend.

I think this whole argument comes down to a question of timeframes. It is all very well to say 'don't invest in a share that is in a downtrend'. The implication behind this is that the downtrend will continue. However, in practice we know that in the long term this is not correct. Shares in a downtrend do not - with rare exceptions (e.g bankruptcy) - continue to suffer share price decline. At some time the share price will turn. The argument then comes down to the reliability of your method predicting when the share price will turn, and T/A is not the only way to do this.

The 'reactive chartist' will claim that he doesn't predict anything. He simply waits for 'the market to react' and acts on that information. But even this is a defacto prediction of sorts. If the downtrend resumes such a trader having bought into a share will be forced to liquidate their position at a loss. If this pattern is repeated too often then the trader will go on to suffer ongoing portfolio losses. Thus there is an underlying 'prediction' in the mind of the trader that the trend, either positive or negative having been established, is likely to continue. Similar predictions or as I prefer to call them 'rules of thumb' are used by share investors as well.

For example value investors 'predict' that shares that are trading below their net tangible asset backing will outperform the market. While there is no guarantee that this will happen for any individual share, there is empirical evidence on shares of this type that this is so. Of course such FA decisions can be in conflict with TA practice and this is when the FA vs TA wars restart.

Here is a thought experiment that T/A practitioners might like to consider. Why should the data that is used in T/A be based on the end of day share closing price? Why not use the 'weighted average trading price', or the 'extreme' (high in the case of a rising share, low in the case of a falling share) intraday price? Why not use the weekly closing price and use weekly charts? The point that I am making here is that to use the closing daily price as the basis for your charting is an arbitrary decision. It is no more or less 'correct' that using any of the other alternative prices I have described.

If you accept that using daily closing prices is arbitrary, and I don't think that anyone can deny that, you must also accept that the timeframe you choose to use for your TA analysis, be it intraday, daily, weekly or monthly is also arbitrary. For an investor, however, the only timeframe that ultimately matters is the time that elapses between when the shares are originally bought and finally sold. This is the only timeframe in which results are crystallized. Whether this 'total share investment time frame' is viewed as a single block, or broken down into 'annual performance units', 'monthly results' or 'daily results' does not affect the share investors final profit or loss. Thus while monitoring your portfolio in daily share price movements is a legitimate investment strategy, it is equally legitimate to only monitor your share price portfolio movements weekly, or not monitor them at all. Believe it or not there are business investments where the share price does not matter, the most obvious being privately owned companies that are not listed.

Now here is the point I have been coming to. It must be an equally 'correct' strategy to invest in a

Snoopy

11-06-2007, 01:07 PM

quote:Originally posted by hairdresser

After reading the learned Snoopys posts I wish I too had loaded up at $6.00 and I then would have the could take pride in averaging down, riding out the speed bumps like the brilliant directors, enjoying the thrill as Telecom invest more in Australia and milk profits from the local infrastructure.

I know you are being sarcastic hairdresser, but really 'pride' doesn't come into it. I was just stating things as they happened.

Of course I am disappointed that the share price didn't move north from when I was buying at around $6. But you have to consider what the alternative courses of action were at the time- not looking back from now! From my perspective there was no downtrend until the day of the unbundling announcement. I fully admit that is only because I include the effects of dividends when looking at any share chart and most chartists do not. But I have argued my point on that with Halebop elsewhere on this page, so I'm not going to go over that ground again.

I know that if you are going to 'get out' over a major announcement like local loop unbundling then that exit should be made quickly. The best you could have hoped for would be to get out during the (with hindsight) dead cat bounce to around $4.90 a few days afterwards. If you had done that you would have missed out on the 43c worth of dividends paid out since. Therefore even with the TEL share price declining to the mid $4.50s today you would not be clearly better off 'getting out' than if you had just continued to hold like I did.

As far as I am concerned 'averaging down' as a phenomenon does not exist. What is lost through any share price decline is already lost and you can only make a decision to 'average across'. That means buy at today's share price. If the business performance has declined and the share price has also declined it is up to you to make the judgement whether the share price decline has fully reflected deteriorating business decisions. If it has then you should buy, quite independently of any investment decision you have made in the past.

quote:
I would almost feel embarrassed to take the 7% dividend [based on my buy in price] even though it is only 1% less than the OCR.

Current gross yield for TEL at $4.65 is 9% (not 7%) which is 1% above the OCR. Of course that is assuming an annual dividend of 28cps which I believe is a conservative assumption.

SNOOPY

discl: hold TEL

duncan macgregor

11-06-2007, 01:21 PM

SNOOPY will never change until his reckless investing style sends him broke. I have a friend who is completely tone deaf, and gets up to sing at kareoke hogging the microphone going on, and on, and on.
I also know a jumbo pilot who is the biggest numb skull doing anything practical. I wouldnt fly xxx for quids.
As long as my bum points to the ground all the above think that they are experts. To try to convince a religeous nutter that the other guy might be right simply cant be done. When a person gets so railtracked, they wont change until disaster strikes, and even then they will tell all and sundry how right they are.
The straight out fundamentals of TEL have been getting worse each year, The long term TA outlook on the company would have made you sell years ago. The shareholders left are either traders in for a quick buck, or have a lot to learn about investing. macdunk

hairdresser

11-06-2007, 01:53 PM

Good post

Sorry for the confusion about the gross yield I was using the $6 entry point as I was trying to be consistent with the the argument that SP movements are irrelevant to returns if the dividend stream continue.

Personally I'm not worried about dividends IMO they're inconsequential. If you want to take some cash you can sell some shares, or reinvest your dividends in more shares.

You are right to include dividends in any return calculation the gross returns derived from SP are always ron unless they take into account dividends. Finance 101. TA is more robust for firms that don't pay dividends.

FYI my FA valuation for Telecom is a little different to yours though.

Earnings from ongoing operations is 23c [after yellow pages sale] assuming no growth.

Back of the envelope calculation:
EBIT $800m
Interest $100m
Tax $224m
NPAT $455m
Shares outstanding 1.8B
EPS 23c

Add on 5c for the expected return from investing the balance of proceeds of the Yellow Pages sale and you end up with EPS of 28c.

[NB I'm not really sure of the interest expense]

Now what multiple should you apply???

The simplest method is just to use the WACC for the telcoms industry which from memory is around 9% [I havent checked recently though]

Add on a bit of country specific and company specific risks as below and say 13% is not unreasonable IMO.

Consider

1. Risk Free Rate is now 8%

2. Company risks
a. The rapid deteriation in margins on mobile business once duopoly goes,
b. They blow there dough in Australia again.

Anyway lets use the 9% which gives a multiple of about 11x and you end up with 11 x 28c = $3.08c.

Add on 50% of the proceed form the sale of Yellow Pages in the capital return, say 50c, and you get a price of around $3.58.

I expect TEL to be heavily sold by US investors at some stage as the downsides for them especially with the currency outweigh the upsides.

If I was holding I would be happy to sell now and be quite confident I could buy in a lot cheaper later in the year.

Disc: Waiting patiently for $3.00

Deev8

11-06-2007, 04:44 PM

quote:Originally posted by hairdresser

Waiting patiently for $3.00I actually know somebody who is waiting for another opportunity to buy Fletcher Building below $3, well sort-of. He almost bought at that price in 2002, but changed his mind. Some time later he changed his mind yet again, and spent a very long time for the price to fall to his missed entry price.

Snoopy

11-06-2007, 05:41 PM

quote:Originally posted by hairdresser

FYI my FA valuation for Telecom is a little different to yours though.

Earnings from ongoing operations is 23c [after yellow pages sale] assuming no growth.

Back of the envelope calculation:
EBIT $800m
Interest $100m
Tax $224m
NPAT $455m
Shares outstanding 1.8B
EPS 23c

Add on 5c for the expected return from investing the balance of proceeds of the Yellow Pages sale and you end up with EPS of 28c.

[NB I'm not really sure of the interest expense]

The third quarter Telecom report came into my hands today with adjusted net earnings of $600m from continuing operations (p2). I'm projecting a net profit from continuing operations of $736m for the twelve months of FY2007. One in nine shares are to be cancelled, so that leaves 8/9 x 1,960m = 1,742m shares left.

For comparative purposes with FY2008, eps for FY2007 will be 42cps.

Personally I think profits may indeed decline from here. But even a 20% decline will still leave earnings at 33cps, which is way north of your 23cps.

quote:
Now what multiple should you apply???

The simplest method is just to use the WACC for the telcoms industry which from memory is around 9% [I havent checked recently though]

Add on a bit of country specific and company specific risks as below and say 13% is not unreasonable IMO.

Consider

1. Risk Free Rate is now 8%

2. Company risks
a. The rapid deteriation in margins on mobile business once duopoly goes,
b. They blow their dough in Australia again.

Anyway lets use the 9% which gives a multiple of about 11x and you end up with 11 x 28c = $3.08c.

Add on 50% of the proceed form the sale of Yellow Pages in the capital return, say 50c, and you get a price of around $3.58.

I follow your logic Hairdresser, but I think you are too pessimistic.

A PE of 11 on earnings of 42cps gives a share price of $4.62. Add to that the capital return of around 50cps and you get fair value of $5.12. A PE of 11 based on earnings of 33cps (a 20% decline) gives a share price of $3.63. Add on 50cps capital return and you get $4.13. And this assumes that the operations in Australia will continue to generate red ink at the current rate. If Telecom can stop making losses in Australia then profits will increase by around $150m. On a multiple basis (using a PE of 11) that is equivalent to 95cps. That is a nice potential upside to offset any earnings deterioration in New Zealand.

quote:
I expect TEL to be heavily sold by US investors at some stage as the downsides for them especially with the currency outweigh the upsides.

If I was holding I would be happy to sell now and be quite confident I could buy in a lot cheaper later in the year.

Disc: Waiting patiently for $3.00

I admire your patience Hairdresser more than I admire your confidence. Eternity is a long time to wait.

SNOOPY

Phaedrus

11-06-2007, 06:06 PM

"It is all very well to say 'don't invest in a share that is in a downtrend'. The implication behind this is that the downtrend will continue."
That is the most likely outcome. Certainly the share is far more likely to go down than up.

"Shares in a downtrend do not... continue to suffer share price decline. At some time the share price will turn."
Yes! So why not wait for that to happen before buying? All trends end eventually.

"The argument then comes down to the reliability of your method predicting when the share price will turn."
NO. You are NOT trying to predict when the price will turn. You are WAITING for it to turn. Of course it is still possible to get it "wrong" and buy too soon, but even then you would be better off in that you would have lost less than someone that bought near the top and has ridden out the entire downtrend.

"Why should the data that is used in T/A be based on the end of day share closing price?"
Because that is the latest price. Because it is widely accepted that the Close is far more significant than the day's Open, High or Low. In any case, many technical indicators use all 4 prices. Candlesticks and the commonly used Bar charts use all 4.

"Why not use the 'weighted average trading price'?"
Because this data is not available from NZ suppliers.

"Why not use the 'extreme' (high in the case of a rising share, low in the case of a falling share) intraday price? Why not use the weekly closing price and use weekly charts?"
Snoopy, you could do any or all of these things. The charts would be almost indistinguishable, all clearly showing the same TEL trends (7 years up, 3 years down, 2 years up etc.)

"If you accept that using daily closing prices is arbitrary, and I don't think that anyone can deny that"
I do! Arbitrary means capricious, arising by accident. There can be little debate that for line charts (where only a single price can be depicted) the Close is the logical choice.

"..you must also accept that the timeframe you choose to use for your TA analysis, be it intraday, daily, weekly or monthly is also arbitrary."
NO! Not at all! The timeframe that you choose is selected to suit your investment horizon, your preferred trading frequency. Short-term traders might use 5 minute charts. A longterm investor such as yourself would use weekly or monthly charts. All quite logical - there's nothing capricious, arbitrary or accidental there!

"Just because you invest at a time when a share happens to be 'in a downtrend.. does not mean your ultimate investment result will be bad."
Right. It just means that you have made no effort to minimise your entry price and could probably buy later at a lower price thus improving your 'ultimate investment result'.

"I am disappointed that the share price didn't move north from when I was buying at around $6"
Snoopy, you knew you were buying into a downtrend, so you should not be surprised or disappointed at this.

"...but you have to consider what the alternative courses of action were at the time - not looking back from now!"
How about doing NOTHING? Too radical for you?!

"From my perspective there was no downtrend until the day of the unbundling announcement."
You even remarked on the fact, noting that you had been 'purchasing in a downtrend' in a post on 10/6/05. When was the unbundling announcement?

Snoopy, I quit. I have explained my views as clearly as I am able but there can be no consensus when you defend what I see as a series of expensive bad decisions as examples of careful thoughtful succesful investment.

Phaedrus

11-06-2007, 06:10 PM

"Actually, the fact that insiders are selling may be a good reason for selling, but this has nothing to do with TA".

Wrong again Hiawatha. TA is surprisingly effective at identifying insider trading and I have posted many charts over the years showing evidence of just that.

Longtack

11-06-2007, 07:36 PM

Hello Phaedrus. How similar is OBV to Money Flow, and can MF be substituted for OBV?

Thank you.

Snoopy

11-06-2007, 10:23 PM

quote:Originally posted by Phaedrus

"The argument then comes down to the reliability of your method predicting when the share price will turn."
NO. You are NOT trying to predict when the price will turn. You are WAITING for it to turn. Of course it is still possible to get it "wrong" and buy too soon, but even then you would be better off in that you would have lost less than someone that bought near the top and has ridden out the entire downtrend.

Anyone who is using a non-reactive system for share pick timing is 'predicting'. Maybe *you* are not predicting Phaedrus, but everyone else with a non-reactive system is. And that would include all those making an FA assessment of the share. Furthermore even though you are not predicting the share price turning point Phaedrus, you are predicting that when the uptrend starts it is 'far more likely to continue' than reverse. So there is a prediction process there underlying your dispassionate entry point selection process.

quote:
"Why not use the 'extreme' (high in the case of a rising share, low in the case of a falling share) intraday price? Why not use the weekly closing price and use weekly charts?"
Snoopy, you could do any or all of these things. The charts would be almost indistinguishable, all clearly showing the same TEL trends (7 years up, 3 years down, 2 years up etc.)

That may be so, but what about if the charts were monthly or yearly? At some time interval if your investment period is long enough (which it always is with me), the chart will give you a different answer depending on your price review frequency period. Ultimately the only calculation that matters will be the difference between your buying and selling price. Whether that result is good or bad does not depend on the frequency of data sampling in between. That is my point.

quote:
"If you accept that using daily closing prices is arbitrary, and I don't think that anyone can deny that"
I do! Arbitrary means capricious, arising by accident. There can be little debate that for line charts (where only a single price can be depicted) the Close is the logical choice.

My dictionary is different to yours Phaedrus. In mine arbitrary means
"Based on an individual decision unrestricted by law or other constraint."
There is no slur of unthinking or accidental behaviour attached.

Perhaps end of day quotes are the practical choice because that is the information that is easiest to obtain? That isn't the same as being the 'logical' choice. By my own logic most companies only report 'six monthly' so the movement of share price should only be looked at six monthly. That is a perfectly logical assessment method, no more or less logical than the daily assessment that you advocate as 'the logical choice'. Like I originally asserted using the daily closing price may be common, what the best traders do , and any number of other things. But it is still an arbitrary decision by my definition.

[quote]quote:
"Just because you invest at a time when a share happens to be 'in a downtrend.. does not mean your ultimate investment result will be bad."
Right. It just means that you have made no effort to minimise your entry price and could probably buy later at a lower price thus improving your 'ultimate investment result'.
<hr height="1" noshade id="q

beacon

12-06-2007, 09:09 AM

Bravo Snoopy. My calculations are closer to your take than hairdresser's too, so I second your valuation calculations.

Also, I'm cautiously confident re Oz, though I took no cognizance of its turn around in my valuation calculations. Buying again

duncan macgregor

12-06-2007, 10:07 AM

hairdresser

12-06-2007, 10:13 AM

I agree too. I third your valuation [though its probably at the higher end of the reasonable range].

I misread the annoucnement and took the $592 figure as EBIT rather than NPAT.

One of the problems of being dyslexic, you have to double check everything. I can nearly always hit the buy/sell button correctly though.....

So you may end up OK with your position.

Snoopy

12-06-2007, 02:11 PM

quote:Originally posted by beacon

Bravo Snoopy. My calculations are closer to your take than hairdresser's too, so I second your valuation calculations.

Also, I'm cautiously confident re Oz, though I took no cognizance of its turn around in my valuation calculations. Buying again

You guys have got me worried now. Last time everyone agreed with me on Telecom the share price plunged down from $6. I feel much more comfortable when no-one on Sharetrader agrees with me as in the past that is when my buying has been the most successful!

The subject of rising interest rates on Telecom's balance sheet deserves some consideration. The sale of yellow pages raised $NZ2,161m. Remove from that the $NZ1,100m capital return and $A357m paid for Powertel (or ~ $NZ400m) an increase in capital expenditure from $825m to $850m (+$NZ25m). That leaves $NZ636m 'all other things being equal' to be transferred to the balance sheet. That neatly covers the $604m of Telecom debt maturing during FY2008 (p79 FY2006 annual report). That will take something like 0.08 x $604m= $50m off the FY2008 interest bill. The next substantial portion of debt does not mature until 14 December 2011. By then the interest rate cycle should have started to turn down, so I am predicting that Telecom, perhaps more by good luck than good design, will be largely immune from the current round of interest rate rises.

Telecom themselves aren't making any predictions about FY2008 so I'm going to have to stick my neck out. I predict continuing losses in Australia but these will be reduced from this years $NZ150m to around $80m through the integration of Powertel. I predict profit will drop in New Zealand by 10% on an ongoing operations basis as the effects of unbundling start to bite. $736m x 0.9= $662m. Add on the potential recovery in Australia and I get a normalised profit figure of $742m or 42.6cps. At $4.65 this represents a forward PE of 11. Dividends are to be set at 75% of earnings so that means an annual dividend of 32cps and a dividend yield of 10.2%. I think that is about right in today's high interest rate environment.

Looking another year out to FY2009 I expect a further deterioration of profit in the NZ market offset by the return to a break even result in Australia. The market will become more comfortable with Telecom's lower NZ market earnings being stable and the market PE will increase from 11 to 13, supported by falling interest rates. By the end of FY2009 that points to a Telecom share price of around $5.50. That's a return of about 20% compounding (dividends and capital appreciation) for the next two years. Now you can see why intend to buy some more Telecom shares soon!

SNOOPY

duncan macgregor

12-06-2007, 02:40 PM

SNOOPY, Have you ever been right ever with your origonal entry price with any company. All I see is excuses for underperformance.:D:D:Dmacdunk

BRICKS

12-06-2007, 03:47 PM

quote:Originally posted by duncan macgregor

SNOOPY, Have you ever been right ever with your origonal entry price with any company. All I see is excuses for underperformance.:D:D:Dmacdunk

IF there is one thing for sure you can say with out drought that SNOOPY will not invite you to his XMAS party.. [8D]

BRICKS

12-06-2007, 04:03 PM

quote:Originally posted by BRICKS

quote:Originally posted by duncan macgregor

SNOOPY, Have you ever been right ever with your origonal entry price with any company. All I see is excuses for underperformance.:D:D:Dmacdunk

IF there is one thing for sure you can say with out a doubt that SNOOPY will not invite you to his next XMAS party.. [8D]

Major von Tempsky

12-06-2007, 04:20 PM

Nah, leave it as "drought" it dovetails nicely with MacDunk's image of an economic backwoodsman who can't understand how Free Trade works...who can't understand full stop. He doesn't hold any TEL and is simply here as a spoiler to disrupt serious and meaningful discussion.
In the meantime I've just bought some more TEL in alignment with Snoopy :D

Phaedrus

12-06-2007, 06:30 PM

Of course you are buying more TEL MvT. You have no choice in the matter. The time has almost come when you must front up with another $3 to convert your $3.36 TELIUA warrants to TEL shares. You are locked into paying $6.36 for a stock currently trading at $4.63! A bitter pill to swallow even if made a little easier by the dividend sugar coating. A disappointing result for an investment made in 2005 - and all you did wrong was buy into a downtrend!

Major von Tempsky

12-06-2007, 06:36 PM

You oughtta make a better effort to keep up with the play Phaedrus old boy. My Teliua warrants were a minot part of my holdings and I've already converted them to Teliud.

In the meantime why don't you front up and disclose you don't have any TEL holdings whatsoever and like MacDunk don't really have any business on this thread except to try and disrupt rational discussions?

I wouldn't be at all surprised to learn that you are also a Creationist.

duncan macgregor

12-06-2007, 06:41 PM

quote:Originally posted by Major von Tempsky

You oughtta make a better effort to keep up with the play Phaedrus old boy. My Teliua warrants were a minot part of my holdings and I've already converted them to Teliud.

In the meantime why don't you front up and disclose you don't have any TEL holdings whatsoever and like MacDunk don't really have any business on this thread except to try and disrupt rational discussions?

I wouldn't be at all surprised to learn that you are also a Creationist.
MVT, nothing rational about your style of investing.:D:D:D macdunk

Halebop

12-06-2007, 07:07 PM

quote:Originally posted by Major von Tempsky

In the meantime why don't you front up and disclose you don't have any TEL holdings whatsoever and like MacDunk don't really have any business on this thread except to try and disrupt rational discussions?

This thread is a forum about Telecom, inviting disparate viewpoints. I don't need to own Telecom to know its hasn't performed. I didn't own Telecom much earlier when warning of the risks and pedigree of non performance and sincerely hope my "irrational" nay saying dissuaded at least one would be owner. The pursuit of excellence requires the fullest practical understanding, a process augmented by the widest possible inputs. So just maybe restricting your universe to holders only might be a tad narrow.

Phaedrus

12-06-2007, 09:07 PM

MvT, I'm only too happy to "front up and disclose (I) don't have any TEL holdings whatsoever" at the moment. I am a bit surprised that you couldn't have worked this out for yourself though, given that I have said many times that I won't hold downtrending stocks. You do know that TEL is in a downtrend, don't you?

You might be interested to know that I am not against TEL per se, and did in fact buy on 4/9/06 (on the basis of a trendline break). I sold on 22/2/07, again on a trendline break. Not much of a trade to be sure, but in round figures I made more in 24 weeks than longterm holders have lost in 24 months.

Longtack, These 2 references give a quick comparison of OBV and MFI.
http://www.investopedia.com/terms/m/mfi.asp
http://www.investopedia.com/terms/o/onbalancevolume.asp
Can MF be substituted for OBV? I suppose so to some extent at least, but my preference is for OBV. I think you already knew that though! If you want to discuss this further, post a query on the "Investment Strategies" forum. We don't want to upset the pedants do we!

Halebop

12-06-2007, 10:52 PM

Tel have recovered from the earlier lows but have not yet broken the longer term downtrend and moreover, have been in a trading range recently before dipping below the 200 day moving average, not a particularly bullish sign

http://img214.imageshack.us/img214/9422/telgifuc3.gif

Phaedrus

13-06-2007, 08:41 AM

"See. I was right. TEL has been trending upwards since September last year"
Fraid not Hiawatha. You are wrong yet again! The chart below is a plot of TEL with market "noise" filtered out. This makes the situation very clear and easy to see at a glance. You can see that TEL was making a series of higher highs and higher lows - this is the September uptrend under discussion here. Can you see that in mid February TEL made a LOWER high? The SP contnued to slide from that point, and in early March it fell below the low of early February. This, then, was a lower low after a lower high. That's the definition of a downtrend. The "September" uptrend ended on 6/3/07 when TEL closed at $4.77.
Sorry you are having such trouble understanding this. It really is a very simple concept. I guess I am not explaining it very clearly.

http://h1.ripway.com/Phaedrus/TEL613001.gif

duncan macgregor

13-06-2007, 09:41 AM

HIAWATHA, The TEL sp is trending down for petes sake, take your blinkers off, and sell the bloody things. The next thing we know you will be comming out with masses of figures from last year to say that next year will be a great year. The share price was double what it is today a few years ago,surely that must tell you something.
Look at the chart the market is telling you to get out. Macdunk

beacon

13-06-2007, 09:51 AM

I don't think my number disclosures really matter here Duncan, nor cn anyone else's because they just muddle the thinking, and cause an unnecessary temptation to lie...

However, since you have asked so ncely, I will oblige to a certain extent. TEL is the biggest holding of our NZ stocks now. And yes, we are in red, because we also bought some as high as $6, as well as having bought various TEL derivatives.

I don't know whether I am a true fundamentalist. I do know that I am not a TA expert, and more an opportunist. I am learning some skills, although less than I desire to. Various commentators on this site, including you, have helped clear my thinking on various occassions, and I am thankful for that to posters on, and administrators of this site.

I am cautiously confident of Oz, because I believe Powertel is more likely to succeed, if its managers deliver. And I wait to see if they will.

duncan macgregor

13-06-2007, 11:05 AM

HIAWATHA, Down another 1.1% this morning so far. Tell us all at what price would you say you made a mistake and get out. The high NZ dollar is holding the price up or havent you considered that?. When that eventually drops, TEL will be one of the hardest hit. All my investments are in the ASX, as the NZ dollar will take a big hit sooner or later. Macdunk

Phaedrus

13-06-2007, 12:04 PM

Hiawatha, let's look at how you got yourself into this mess :-
(1) You first bought TEL well over a year ago at $5.50, when it was in a downtrend.
(2) The downtrend continued, so you bought more, lowering your average to $5.44.
(3) The downtrend continued, so you bought more, lowering your average to $5.07.
(4) Today, TEL is at about $4.58.
Keep in mind the fact that over this time, the market was booming. In other words, you have paid a very high opportunity cost as well.

To me, there are lessons to be learned here :-
(1) Don't buy downtrending stocks. Wait. There is no hurry.
(2) If you make a mistake, recognise it, admit it - and get out. The earlier the better.
(3) Don't average down. (Don't throw good money after bad)
(4) Wait for an uptrend before buying. (You would have been buying somewhere in the green circle marked on the Page 21 chart)

For the life of me I cannot understand why you guys defend your approach so vigorously and tenaciously when any fool can see that the results you have achieved are appalling. Rather than admit that your system is seriously flawed, you each take comfort in the fact that others have made and are making the same mistakes.

The Ostrich view of reality :-
(1) I have made no mistakes.
(2) I have got a good, profitable system that cannot be improved.
(3) TEL was and is a good buy.
(4) It is good to buy in downtrends. (I am a contrarian)
(5) I have done well out of TEL.
(6) TEL is in an uptrend and looking really good.

Hiawatha, I am giving up on you at this point. I'm tired of the wrangle and you must be getting sick of my screaming WRONG whenever you try to make a point. How can we hope to discuss the current downtrend when you refuse to accept that it even exists? What hope is there that we could reach some common understanding when you cannot accept that holding shares during a downturn incurs a capital loss!

All the best, P.

Longtack

13-06-2007, 12:38 PM

Thanks for that P. I'd forgotten about that forum.

Enumerate

13-06-2007, 12:44 PM

Looks to me as if Telecom has resumed the downtrend that started in July 2005. The dip in May - July 2006 has been "recovered from" as investors "de-spooked" from the immediate regulatory threat.

I'd suggest the main reason for the down trend is the market perception of the regulatory framework in NZ. In 2005 Cunliffe became Minister of Communications (from associate, I believe). The regulatory framework up to that time was loose - following the Ministerial Review in about 2000 and the Hugh Fletcher report.

I'd suggest that 2005 was the watershed year when Labour Party doctrine triumphed over property rights. The first elements of the Cunliffe regulatory framework began to appear.

My view, in a nutshell, is that Cunliffe is a prime idiot meddling in a sector he does not understand. Telecommunications Regulation is a code word for Anti-Telecom Property Rights. The stated objectives of fostering investment in broadband are simply drivel and cant. The sector is being primed for a massive period of underinvestment while the Wellington Commissars produce their 5-year plans for a "great leap forward".

[/Disclosure: I got into TEL.NZX at below NZ$4 but got out at $4.60 due to better opportunities - I have a very small holding due to the timing of a dividend re-investment payment. Watching and waiting to get back in - prime reason will be a more rational regulatory framework. Looks like I need a Gov't change to effect this pre-condition].

duncan macgregor

13-06-2007, 01:45 PM

I think that is where we differ its not last years profitability that I look at its next years potential. Its funny how the market gets it right so often in advance of announcements. The market is never wtong, it sets the sp, pay close attention to the market trend is the way to reduce your mistakes. Holding on hoping that losers will stop losing only means you will end up holding a bunch of losers. Having a system that gets rid of losers and selects winners is not very complicated. TEL have increased competition, plus govt intervention, plus an overpriced NZ dollar all on the downside.
With all that against them how anyone would hold them is beyond me. MACDUNK

Snoopy

13-06-2007, 02:02 PM

quote:Originally posted by hiawatha

Incidently,I have never claimed I don't make mistakes. I obviously made a mistake in believing, despite the government's rhetoric, that LLU would not go ahead. I believe my reasons for ignoring that rhetoric were sound at the time. But obviously events proved me wrong.
hiawatha

I'm in the same boat as you Hiawatha. I don't believe that any of us who invested in TEL in the year before the unbundling announcement thought it was going to happen. Of course we all knew unbundling was *a possibility*. That was the reason why the TEL share price was continually 'depressed' (sic) at around the $6 level.

So were we wrong to buy in? With the benefit of hindsight, 'yes'. But of course no-one invests with the benefit of hindsight so that is not the right question to ask. We need to ask whether we were wrong *without the benefit of hindsight*. IMO if LLU had not happened the share price of Telecom would be close to $7 by now. IOW we would all be looking very clever. I can't speaak for the rest of you who bought at between $5.50 and $6, but in my case I don't believe that stocking up on Telecom at $6 was a mistake at all. I took a bet which had a good potential payoff. The bet didn't come off. But was I wrong to take the bet, given the odds as I saw them on the table at the time? IMO, NO!

Some would say I am being pigheaded. But IMO the pigheaded ones are those that claim local loop unbundling was 'definitely a done deal' as shown by the 'downtrend'(which I dispute as it didn't consider dividend payments) immediately prior to the LLU announcement. The fact that the TEL share price plunged after the LLU announcement showed that *the market had it wrong* - badly wrong.

There was always another 'alternate reality' on the cards. That was the reality where Telecom retained monopoly ownership over their network, the uncertainty about unbundling was eliminated from the market and Telecom profits really started to roll. We can debate the *likelihood* of this happening compared with the unbundling decision alternative. But to pretend that a year out from the unbundling decision it was a 'done deal' is the ultimate in pigheadedness.

To those who hold out the rule 'don't buy a share in a downtrend' I hold out an alternative rule of thumb.

"Don't sell a share that is about to gift you an enormous cash payout."

I'm not talking about just the capital return of 55cps. I'm also talking about the final dividend of 10.5cps (not 7cps) which I don't think the market has yet cottoned on to. In the face of a payout of 65cps within three months I think it is very unlikely the TEL share price will fall much further. That's why I prepared to buy in a downtrend. Because I am at least 80% sure we are within cooee of the bottom. It would be unprecedented in market history if we were not given the payout on the horizon. This is a case of the potential missed opportunity cost being too high not to buy.

SNOOPY

discl: hold TEL

Phaedrus

13-06-2007, 02:39 PM

And I'm at least 80% sure than when TEL goes 'ex' the 10.5 cent dividend, the shareprice will most likely drop by, oh, maybe about 10 cents?

I'm also at least 80% sure than when TEL eventually makes the keenly anticipated 55 cent capital repayment, the shareprice will drop by, oh, shall we say, approximately 55 cents? Isn't that what usually happens in such circumstances?

We could argue forever over the "value" of TEL shares, but whatever the figure, isn't TEL worth [u]EXACTLY</u> 55 cents less once the repayment has been made?

There's no such thing as a free lunch!

duncan macgregor

13-06-2007, 02:58 PM

Hate to say you are wrong PHAEDRUS, but you miss a very important point. TEL are selling the most profitable part of the business to pay that 55c. Next year you can deduct that profit from the bottom line. I dare say the market will take that into account and further punnish the share price more than the 55c, if not straight after the payment then further down the line when some of these people wake up. MACDUNK

Phaedrus

13-06-2007, 04:13 PM

Actually Dunc, the important point that I missed is that there will be a share cancellation at the same time. So...... the actual shareprice might not move much at all - you would simply own fewer shares. Either way, the $1.1 billion comes straight off the capital value of Telecom and the cash you receive should equate exactly with the concomitant capital reduction you absorb because you will then own fewer TEL shares.
As I say, there is no such thing as a free lunch.

Snoopy

13-06-2007, 04:35 PM

quote:Originally posted by Phaedrus

Actually Dunc, the important point that I missed is that there will be a share cancellation at the same time. So...... the actual shareprice might not move much at all - you would simply own fewer shares. Either way, the $1.1 billion comes straight off the capital value of Telecom and the cash you receive should equate exactly with the concomitant capital reduction you absorb because you will then own fewer TEL shares.
As I say, there is no such thing as a free lunch.

That's right Phaedrus. But you will also find that TEL, and most other high yielding shares, tend to recover their dividend in share price after these payouts reasonably quickly. The reason for that is that the paying of a large dividend effectively discounts future earnings that should be built into the share price. Over time the market recognises this and the share price recovers.

SNOOPY

Mick100

13-06-2007, 04:55 PM

quote:Originally posted by Snoopy
The reaason for that is that the paying of a large dividend effectively discounts future earnings that should be built into the share price. Over time the market recognises this and the share price recovers.

SNOOPY

I don't get it snoopy
Could you explain this more fully - thanks
.

Snoopy

14-06-2007, 12:11 AM

Snoopy wrote
The paying of a large dividend effectively discounts future earnings that should be built into the share price. Over time the market recognises this and the share price recovers.

Hi Mick. It's late so hopefully I won't screw my explanation up. I'll pick some round numbers to make my explanation easier.

Imagine a company called 'Phonecom' with a share price of $4 which pays out all of its earnings of 40cps in dividends in one hit. That means the share is trading on a PE of 10 which is probably about right for a 'no growth' utility with a flat outlook.

Immediately before going ex-dividend the share price is $4. Immediately after going ex-dividend of 40c the share price drops to $3.60. Nothing unexpected there. However based on next years projected earnings of 40c the company is now on a PE of 360/40= 9. One day earlier the PE was 10. So what has changed in that one day for the outlook for the company - nothing. So there is no logical reason for the PE to drop to 9. It is only the paying of the 40c dividend that has allowed this to happen.

There is a logical explanation for all of this though. If you buy the share on the ex-dividend date you do not have to wait for your 40c dividend. If you buy the share the day after the ex-dividend date you have to wait a whole year to get your 40c. Thus the discounted price you pay for your shares ($3.60) fully reflects the fact that you are going to have to wait a whole year to get your 40c dividend. In theory the discount will close by 40/365 cents per day until on ex-dividend day one year later the 'Phonecom' share price is $4 again. Are you with me so far?

Now imagine you are approaching this market never having held any shares before with your buyers hat on. Suddenly you see all of these utilities on a PE of 10, but one stands out with a PE of 9 - 'Phonecom'. Obviously 'this is the one to buy' as it is the cheapest, so the buying pressure goes on. Thus the share price of 'Phonecom' will increase more rapidly than it theoretically should.

The lower the PE (or conversely the higher the dividend yield) the more pronounced this 'price catch up too fast effect' from shedding the dividend is. This is just my explanation for what happens. You won't find this explanation in any 'text book', so make of it what you will.

SNOOPY

Mick100

14-06-2007, 01:02 AM

That's a perfectly good explanation Snoopy
Your right, I havn't come across this kind of reasoning in the text books so far - I'v just finished a section on dividend valuation models.
That's why I asked for an explanation.
Thanks again for making the effort.
,

Phaedrus

14-06-2007, 10:42 AM

Here are some worked examples of possible outcomes of the TEL cash repayment, based on an initial holding of 9000 TEL shares.

[u]Scenario 1</u>.
TEL rises to $5.20 - your 9000 holding is worth $46,800. After receiving a lump sum repayment of $4880, you now have 8000 TEL worth $41,920 - that's $5.24 each, so TEL's shareprice rises by 4 cents. After the cash payout you have $4880 cash in hand and 8000 $5.24 TEL shares. Total :- $46,800.

[u]Scenario 2</u>.
TEL falls to $4.40 - you have a 9000 holding worth $39,600. After receiving a lump sum repayment of $4880, you now have 8000 TEL worth $34,720 - that's $4.34 each, so TEL's shareprice falls by 6 cents. Your TEL net worth was $39,600 before the gift. After the gift you have $4880 cash in hand and 8000 $4.34 TEL shares. You are now worth $39,600.

Scenario 3.
TEL is $4.88 at the time of the payout - you have 9000 shares worth $43,920. After the return of capital you have 8000 $4.88 shares worth $39,040, plus $4880 cash. A total of $43,920.

Whatever the scenario, you are no better off. You end up with a bit of cash in your pocket and fewer shares in a (presumably) smaller, less profitable company.

Snoopy sees this enormous cash payout as a gift. To me it is the compulsory acquisition of one ninth of his shareholding - for zero net gain! Clearly, one of us needs help urgently. Please check my calculations and advise me if you think the examples here are occasioned by faulty logic - or are the product of a diseased mind. I can take it. I think.

Snoopy offered us a new maxim :- "Don't sell a share that is about to gift you an enormous cash payout."

I would like to add a couple of old maxims :-
"If it sounds too good to be true, it probably is!"
or
"Beware of Geeks bearing gifts!"

winner69

14-06-2007, 11:34 AM

TEL up 4 cents today .... is that 'gift' from above

winner69

14-06-2007, 11:36 AM

Has anybody factored in the likely 25 cent increase in TEL shareprice when a new guru takesover

Find a smart man (oh no not a woman this time please) and the market will rerate accordingly

winner69

14-06-2007, 12:23 PM

quote:Originally posted by hiawatha
[br .....because he will have received 4.88 for shares that are assumed to be worth only 4.40.

.... now that IS a 'gift' ....... see Phaedrus there is such a thing as free lunch

Phaedrus

14-06-2007, 01:53 PM

THAT'S IT! Suddenly I get it! THAT'S why Snoopy hopes the shareprice will fall! As the shareprice falls, the fixed capital repayment becomes relatively more generous and thus the bigger the gift! Cunning eh? If the shareprice was higher than $4.88, holders would be getting compensated for their cancelled shares at less than the market rate - not that they have any choice in the matter!

hairdresser

14-06-2007, 05:53 PM

There are 2 options for Telecom re the cash.

1) Reinvest at hopfeully more than the WACC or 2) return it to shareholders.

Cash is worth nominal value so in Snoopys example the firm with the P/E of 10 included the cash payout ie P/E of 9 plus 1c for the cash.

Thats why you won't find that in the textbooks...

Snoopy

14-06-2007, 07:19 PM

quote:Originally posted by hairdresser

There are 2 options for Telecom re the cash.

1) Reinvest at hopefully more than the WACC or 2) return it to shareholders.

Actually there is a third option. Repay debt. I think that is what they will be doing.

SNOOPY

hairdresser

14-06-2007, 07:36 PM

Repaying debt is an investment with a return below their WACC.

If thats the best they can come up with I would rather have the cash and do something with it myself. An 8.5% return is like a bank deposit rate.

Snoopy

14-06-2007, 08:32 PM

quote:Originally posted by hiawatha

Thanks for the analysis, Phaedrus. But you didn't need to go to all that trouble. It is intuitively obvious that if the market price adjusts itself so as to exactly offset the effect of the payout, the shareholder will be no better off, and no worse off, than he was prior to that payout.

I can't disagree with the logic or the maths that Phaedrus has expressed. But there is one figure that has never been quoted by Telecom that, if it was available, might help to resolve this discussion. We know the Yellow Pages Group was sold for NZ$2,161m.
But what was the *profit* on this sale?

Why do I want to know what the profit was? Because I think that Telecom investors, if they knew this, would be able to see that quite a lot of hidden value has been unlocked by the sale process. Conventional wisdom is that 'the whole' is simply 'the sum of its parts'. But if you consider that the market value of Telecom is 'the whole', then I don't think conventional wisdom works.

I'm going to take a 'wild guess' and say that the book value of 'Yellow Pages' was 10cps, just to illustrate a point.

The successful bid is worth 50cps to shareholders, so that unlocked for us a 'certain profit' of 40cps. As far as the market is concerned, this 40cps was 'created out of nothing' as a result of the successful bid. Thus before the bid the market valued Telecom at $4.50 (using round figures). After the bid that same collection of assets were suddenly worth $4.90. But if the market only valued Telecom at $4.60 after the announcement we can see that the residual assets of Telecom are now only valued by the market at:

$4.60 - $0.50 = $4.10

Now compare that figure with the value of Telecom's residual assets before the bid:

$4.50 - $0.10c = $4.40

Thus we can see that the process of selling off 'Yellow Pages' has created a discount in the valuation of Telecom's residual assets of 30cps. I'm not quite sure why this is. But if you believe that the value of Telecom's residual assets will not change, whether YPG remains 'in house' or not, then once the capital return is made to shareholders, this discount will suddenly become more obvious.

If the long term earning potential of the 'Telecom Residual' is 40cps, then at $4.50 (before the sale of YPG happened), 'Telecom Residual' was trading on a PE of $4.40/0.40= 11.

After the sale was announced to the market, 'Telecom Residual' was trading on a PE of $4.10/0.40= 10.25.

My assertion is that the YPG bid has created a kind of P.E. discount from 11 down to 10.25. By 'hanging in there' and not selling until the big capital return payout is made, this is your best chance as a shareholder of cashing up this discount.

I know it doesn't make mathematical sense that you should be able to exploit the market in this way. I can't explain why the market created a 'Telecom Residual' discount after the details of the successful YPG bid became known. All I know is that is has, and if you want to take advantage of it you should not sell before the capital return.

Is that a better explanation of why I think you should continue to hold TEL while the capital payout works its way through the system?

SNOOPY

quote:
PS: The shareholder will be better off in the second scenario because he will have received 4.88 for shares that are assumed to be worth only 4.40. He would be be worse off in the first scenario, but it would depend on whether he has a choice in the matter.
h

Snoopy

14-06-2007, 08:43 PM

quote:Originally posted by hairdresser

Repaying debt is an investment with a return below their WACC.

If thats the best they can come up with I would rather have the cash and do something with it myself. An 8.5% return is like a bank deposit rate.

I'm not sure it is a long term debt repayment. All I know is from p79 of the annual report. 0„5200m of debt (which just happens to equal near enough the balance of cash Telecom retain after paying for Powertel and giving us shareholders the Capital repayment) is due on 12th December 2008. Corporates don't like to wait until the last day to renegotiate these loans. By having 0„5200/$NZ600m in the bank now, Telecom are in a good position to renegotiate this loan on favourable terms.

SNOOPY

winner69

14-06-2007, 09:27 PM

Guys - you can sleep easy tonite

This guy says the REAL value of TEL is $4.74
http://www.valuecruncher.com/downloads/Example-PLC.pdf

Good stuff eh

Snoopy

14-06-2007, 10:50 PM

quote:Originally posted by winner69

Guys - you can sleep easy tonite

This guy says the REAL value of TEL is $4.74
http://www.valuecruncher.com/downloads/Example-PLC.pdf

Good stuff eh

Yes I agree, I found that website a couple of months ago when searching for something else but had forgotten how to get there. Thanks for the link.

Now take a look at the date of the report Winner. It is just
over a year old. Mind you, earnings are forecast to be flat to slightly declining (which I agree with). So generally the report is still valid with the exception of one important detail. No consideration is given to the YPG sale.

If the sale has generated value of 40cps according to my prediction then the mid point valuation is really $5.14. Also I think the waited cost of capital used - 10% - is too high. If it were 9% then the mid point of the share valuation would be up around $5.50. That is where I expect the Telecom share price to be by the end of FY2009.

SNOOPY

discl: hold TEL

duncan macgregor

15-06-2007, 08:49 AM

quote:Originally posted by Snoopy
Now take a look at the date of the report Winner. It is just
over a year old. Mind you, earnings are forecast to be flat to slightly declining (which I agree with). So generally the report is still valid with the exception of one important detail. No consideration is given to the YPG sale.

If the sale has generated value of 40cps according to my prediction then the mid point valuation is really $5.14. Also I think the waited cost of capital used - 10% - is too high. If it were 9% then the mid point of the share valuation would be up around $5.50. That is where I expect the Telecom share price to be by the end of FY2009.

SNOOPY
discl: hold TEL
I take it you are still happy to be a holder going by your own forecast at $5-50 for the year ending 2009 when the sp is $4-64 at the moment in the year 2007. If i had a share at that price today, and thought that, I would be right out of it five minutes after the market opened. You should have bought some MCR snoopy like I told you, which you rubbished as being fundamentaly unsound at $2-15 in jan. $4-85 today will be $6-00 before 2007 year expires.
When you forecast something in the past hindesight dictates if you get it right or wrong. I struggle to find one company from your past disclosures that you ever got it right. Macdunk

Snoopy

15-06-2007, 10:54 AM

quote:Originally posted by duncan macgregor

I take it you are still happy to be a holder going by your own forecast at $5-50 for the year ending 2009 when the sp is $4-64 at the moment in the year 2007. If i had a share at that price today, and thought that, I would be right out of it five minutes after the market opened.

That is $5.50 by EOFY2009 *plus dividends* which even in the case of the slimmmed down Telecom will be significant. I would say around 30cps per year. So we are talking about a compounding rate of return of:

$4.64(1+i)^2=($5.50+0.60)

I get a value of 15% from that. You ask am I satisfied with that?

Well, no I do expect things to get better from there. Long term I think that when Telecom settles at their new lower earnings levels a PE of around 15 will be justified, not 13 as I earlier stated. But it will take a while for the market to settle down so I'm not going to stick my neck out and say this will happen by the end of FY2009 (June 2009). Also remember I am predicting no return from Australia at all. That means precisely nothing. If Telecom can make *any* money at all in Australia my own return will go up.

So yes I am hopeful of a better than 15% pa compounding return. But I'm not banking on it. What I am saying is, even if things continue more or less as they are now with declining earnings in New Zealand and the gradual elimination of losses in Australia I will *still* expect a 15% pa compounding return.

If 15% pa compounding isn't enough for you, and you feel very confident in my scenario, you could buy TELIUD instead like the Major has. That will significantly increase your return albeit at the risk of greater downside should my conservative(?) scenario prove optimistic. I prefer not to invest in options, but then that is just me. I was 'proved right' with my strategy to steer away from leveraged investments in that TELIUA proved a poor investment - with hindsight. But this should not be taken as a portent of doom for TELIUD, as past results for options are not indicative of future performance. I wish the Major the very best of luck. My hunch is that he will do well out of TELIUD.

quote:
When you forecast something in the past hindsight dictates if you get it right or wrong.

I don't share your world view of business. It is far too glib to suggest a company gets it 'right' or 'wrong'. A company that gets it right could always have done better. A company that gets it wrong could always have done worse. There are always lessons to be learned. If you get it wrong, in the sense that the market marks the share price down, you as an investor need to go back and check your modelling assumptions. If your assumptions were wrong you should reassess your position as to whether the drop in market value fully reflects your mistake. If it doesn't, perhaps you might sell out. If it does you should continue to hold and perhaps buy more if the share price drop means your historically poorly performing share is now 'good value'.

NZers have a tendency to kick the tall poppy if the flower falters. But generally I regard Telecom as an excellent company, in terms of the service they provide for the price, and a 'must hold' in any NZ investment portfolio. That is not to say I approve of absolutely everything Telecom do. And MS Gattung has made some unfortunate gaffs in recent times (but note that she has paid for them). Nevertheless, if you want to name a Telecommunications company that unequivocally does a better job than Telecom 'for the average consumer', I'll bet you can't.

[quote]<font size="1" face="Verdana, Arial, Helvetica"

duncan macgregor

15-06-2007, 01:16 PM

SNOOPY you have been telling all and sundry about averaging down on TEL,RBD,SKY,SKY,TUA,SCT,. Some of those are at rock bottom, with you coming back telling us what a bargain they are. Now you want to invest in start up dairy farms in south america. I dont think WARREN would be impressed with you hanging on to his coat tails with that lot trying to do an impersonation of his investing ability. Macdunk

Snoopy

15-06-2007, 05:13 PM

quote:Originally posted by duncan macgregor

SNOOPY you have been telling all and sundry about averaging down on TEL,RBD,SKY,SKY,TUA,SCT,. Some of those are at rock bottom, with you coming back telling us what a bargain they are. Now you want to invest in start up dairy farms in south america. I don't think WARREN would be impressed with you hanging on to his coat tails with that lot trying to do an impersonation of his investing ability. Macdunk

The difference between you and I Macdunk, is that you invest only by using the rear vision mirror. There is no such thing as 'averaging down'. It is only possible to buy at today's prices which means you are 'averaging across'. Also I have never claimed that Warren would invest in any of those shares, except TEL just recently. Just go to the 'Focus Investment Group' and you will see that I specifically said that RBD, SCT and TUA should *not* proceed to the next level of investment analysis, following their initial screening.

Surprisingly enough when a price is low, sometimes a share is a bargain. Obviously you have never done anything like grocery shopping yourself!

I have never invested in SKY,and repeating it twice doesn't make your statement any less false. If this was a newsgroup I could simply killfile you and I wouldn't have to put up with reading your posts. Here you can go on and on with the same untruths and now you can't seem to comprehend any sentence without the word 'nickel' in it. I'm not sure what more I can do apart from start a petition to have you banned from this forum. It would be a pity as once upon a time you were a valued contributor.

SNOOPY

hairdresser

15-06-2007, 05:35 PM

Why would you want to TEL when the targt price is 4.74??

Consider the risks.

Easier access for entrants new mobile market.

This will happen. Econet and Telstra are wating in the wings for new regualtions, they have be unable to negotiate a deal with TEL or VOD that works for them under the current regulations.

Once the duoploly is broken prices will plummet and should take a couple of bucks of the TEL valuation.

Snoopy, do you understand why TEL wanted to sell its copper lines. No growth prospects for copper technology, there are much higher margins in wireless and much more growth potential.

You may have missed the unbundling surprise "not", dont miss the mobile surprise. At $4.60 you'll be getting out near the top.

PS for the property right die hards. All developed countries have in place laws and regulations that limit anti-competitive behaviour for monoplies and duoploies to prevent restriction of output through price and innovation. If someone can argue why monoplies and duoplogies are good for society, I would be interested in hearing their arguments.

Major von Tempsky

15-06-2007, 05:36 PM

Was he ever a valued contributor?
Must have been a long, long time ago....

craic

15-06-2007, 06:58 PM

This is the third time I have penned this S*it and each time I have forgotten the post button
Hairdresser, I will hold you to this post. How many of your companies give four divs per year/ and how many are as reliable as TEL for "buy at the bottom, sell at the top" profiteers? Tel makes up 4.2% of my portfolio but I have the greatest confidence In their ability to pay for the fine Jamaican rum that causes me to to give vent to this outbursty.

duncan macgregor

15-06-2007, 07:35 PM

quote:Originally posted by Snoopy

quote:Originally posted by duncan macgregor

SNOOPY you have been telling all and sundry about averaging down on TEL,RBD,SKY,SKY,TUA,SCT,. Some of those are at rock bottom, with you coming back telling us what a bargain they are. Now you want to invest in start up dairy farms in south america. I don't think WARREN would be impressed with you hanging on to his coat tails with that lot trying to do an impersonation of his investing ability. Macdunk

The difference between you and I Macdunk, is that you invest only by using the rear vision mirror. There is no such thing as 'averaging down'.

I have never invested in SKY,[:o)][:o)][V]and repeating it twice doesn't make your statement any less false. If this was a newsgroup I could simply killfile you and I wouldn't have to put up with reading your posts.
SNOOPY
SNOOPY you have made quite a few posts about SKC. Before you call me a lier look up the SKC thread. on the 2005 SKC on share trader you stated you were a holder[B)]. Then later on in august of that year you stated that you were a holder twice. Should instead of banning me, ban yourself or would you rather creep under the nearest rock?. I dont tell lies SNOOPY used to think you might have similar values. MACDUNK

Snoopy

15-06-2007, 08:16 PM

quote:Originally posted by duncan macgregor

quote:Originally posted by Snoopy

quote:Originally posted by duncan macgregor

SNOOPY you have been telling all and sundry about averaging down on TEL,RBD,SKY,SKY,TUA,SCT,. Some of those are at rock bottom, with you coming back telling us what a bargain they are. Now you want to invest in start up dairy farms in south america. I don't think WARREN would be impressed with you hanging on to his coat tails with that lot trying to do an impersonation of his investing ability. Macdunk

The difference between you and I Macdunk, is that you invest only by using the rear vision mirror. There is no such thing as 'averaging down'.

I have never invested in SKY,[:o)][:o)][V]and repeating it twice doesn't make your statement any less false. If this was a newsgroup I could simply killfile you and I wouldn't have to put up with reading your posts.
SNOOPY
SNOOPY you have made quite a few posts about SKC. Before you call me a lier look up the SKC thread. on the 2005 SKC on share trader you stated you were a holder[B)]. Then later on in august of that year you stated that you were a holder twice. Should instead of banning me, ban yourself or would you rather creep under the nearest rock?. I dont tell lies SNOOPY used to think you might have similar values. MACDUNK

Macdunk, 'SKY' is Sky Television! I have been an investor in SKC (Sky City Entertainment) for many years. Sorry if I have maigned you unjustifiably but please try to be a little more careful in what you write

SNOOPY

Snoopy

15-06-2007, 08:50 PM

quote:Originally posted by hairdresser

Why would you want to TEL when the target price is 4.74??

As I said in a previous post hairdresser, that target price predates the sale of Yellow Pages. It is out of date, I'd say 40c too low as a minimum.

quote:
Consider the risks.

Easier access for entrants new mobile market.

This will happen. Econet and Telstra are wating in the wings for new regulations, they have be unable to negotiate a deal with TEL or VOD that works for them under the current regulations.

Once the duoploly is broken prices will plummet and should take a couple of bucks of the TEL valuation.

How much of Telecoms profit comes from 'mobile' Hairdresser? Last year it was $111m by my estimates. This year, perhaps up to $150m out of about $750m (excluding yellow pages). Even if TEL made no money at all on mobile (which isn't going to happen), profits would only fall by 20%. A 20% permanent diminuition in profit could leave the share price at $3.60. Yet you think that the Telecom share price is bound to go down by 'a couple of bucks' leaving it at $2.60? Get real!

Also what you haven't taken into account Hairdresser is that even if the duopoly is broken Vodaphone and Telecom will still be the only two wholesalers out there. So a 10% decline in market share to a 'new player' would not lead to a 10% fall in revenue. The revenue fall would be closer to 2%. Telecom can live with that.

quote:
Snoopy, do you understand why TEL wanted to sell its copper lines. No growth prospects for copper technology, there are much higher margins in wireless and much more growth potential.

For FY2006 the 'NZ Wireless' Margin was $111.1m/$865m = 12.8%

The 'NZ Wired' Margin was $779/$2963m = 26.2%

We can argue about the growth potential, but you are dead wrong about wireless having higher margins Hairdresser.

quote:
PS for the property right die hards. All developed countries have in place laws and regulations that limit anti-competitive behaviour for monoplies and duoploies to prevent restriction of output through price and innovation. If someone can argue why monoplies and duoplogies are good for society, I would be interested in hearing their arguments.

Of course monopolies and duopoloies aren't good. But in order to see what could happen, go to the 'Ofcom' website in the UK. That is the official regulator of telecommunications services in the UK and you will see what happened to network pricing when 'British Telecom' was forced to give competitors network access. You can read the prior submissions put in by BT and their competitors and what Ofcom decided as a result of the consultation process. You will then have an informed view of how much Telecom in NZ is likely to be 'overcharging'. I've done all that and come to the conclusion that it isn't much. People looking for a big reduction in their phone bills with unbundling are in for a disappointment.

SNOOPY

duncan macgregor

15-06-2007, 09:27 PM

quote:Originally posted by Snoopy

Macdunk, 'SKY' is Sky Television! I have been an investor in SKC (Sky City Entertainment) for many years. Sorry if I have maigned you unjustifiably but please try to be a little more careful in what you write

SNOOPY
[/quote] SORRY SNOOPY I DID GET IT WRONG. [:I][:I]MACDUNK

tim23

15-06-2007, 11:43 PM

SKT is Sky TV you people if you are talking codes so you may as well get it right?

Snoopy

16-06-2007, 03:51 PM

quote:Originally posted by tim23

SKT is Sky TV you people if you are talking codes so you may as well get it right?

SKT is the new ticker code for Sky TV after it merged with INL a couple of years back. Before that the ticker code was SKY

SNOOPY

Major von Tempsky

27-06-2007, 04:25 PM

"Telecom New Zealand announced today that it has received initial High Court orders for the proposed Scheme of Arrangement to return approximately $1.1 billion to shareholders. In addition, Telecom has received a notice from the Inland Revenue Department which allows the payment not to be treated as a dividend for New Zealand income tax purposes."
Result?
Tel goes down 6cps. Further support for people like Warren Buffett who believes that the market is not rational. And in the case of Tel where the large majority of the shares are owned overseas where NZ tax considerations don't apply....extremely irrational.

Phaedrus

27-06-2007, 05:59 PM

TEL is in a "long-term" downtrend.
It is also in a "medium-term" downtrend.
It has been in a "short-term" downtrend all this year.

Downtrending stocks do have a general tendency to drop in price - that's why many people don't like holding them.

MvT shouldn't be too surprised at today's price weakness - it is simply the continuation of a pre-existing and on-going downtrend. He will have to get used to this sort of thing if he persists in investing in downtrending stocks.

http://h1.ripway.com/Phaedrus/TEL627.gif

winner69

27-06-2007, 07:23 PM

Was TEL really over $9 once?

Stranger_Danger

27-06-2007, 07:29 PM

Yup, but that was back when having your secretary playing games on Yahoo qualified you as a tech stock.

winner69

27-06-2007, 07:51 PM

Was that when it was classed as a GROWTH stock ....

Major von Tempsky

27-06-2007, 09:46 PM

What another load of bollocks from Phaedrus. I sold out my 20,000 I then had when it was about $8 but not due to chicken entrail readings from horoscope charts.
I will continue to buy into it as a value stock a la Warren Buffett on my own judgment.

duncan macgregor

28-06-2007, 02:22 PM

quote:Originally posted by Major von Tempsky

What another load of bollocks from Phaedrus. I sold out my 20,000 I then had when it was about $8 but not due to chicken entrail readings from horoscope charts.
I will continue to buy into it as a value stock a la Warren Buffett on my own judgment.
MVT, I think you should learn a bit more about reading chicken entrails, and pay more attention to what you wrote in the past, before making rash statements. ON the 4-11-2005 TEL thread you stated that you had purchased 32,600 TEL shares at $5-71.
Todays price of $4-45 gives you a loss of $41,076-00 less dividends in a fast rising market over that period. Reading between the lines i think that you and SNOOPY both averaged down the whole way From $8-00. Its only going by what you told us in the past major I always stated TEL was a dog. [?] Macdunk

Crypto Crude

28-06-2007, 02:44 PM

mackdadunk,
I like your style....>>>[8D]
this is a great thread to be watching from the sidelines...
anticipation of a response to your post above....
:D
.^sc

Major von Tempsky

28-06-2007, 09:36 PM

Nice one Hiawatha! Good score! Come back to Global Warming - all is forgiven.
Get out of the sandpit MacDunk, that's only a minor part of my TEL holdings bought at different times at different prices in different quantities.

duncan macgregor

29-06-2007, 08:54 AM

quote:Originally posted by hiawatha

quote:I always stated TEL was a dog. Macdunk

And no doubt you're a lamppost.
hiawatha
I like your humour HIAWATHA:D:D. You seem to approve MVT telling porkies about his investments. Tell me Hiawatha as a man of integrity do you beleave you should sit it out in silence when you know its bullsh*t?. Macdunk

lovegear

29-06-2007, 12:40 PM

Entered a long position in TEL yesterday using CFDs on announcement of the CEO. I see TEL stuck in a trading range of roughly 4.50 - 5.00. Hoping the new CEO is a catalysts to get it to upper end of range.

Major von Tempsky

29-06-2007, 04:35 PM

I haven't told porkies about any of my investments. I can just as easily and probably with more justification allege that MacDunk has told porkies about his.
Why should I disclose its full extent and size?
Other people disclose all the different shares they hold but very few disclose how many they have of each sort, when they bought them at what price, whether they used derivatives & &.
Why should I?
How secure do you think Sharetrader is?
Its secure as its weakest link, the weakest clerk, the hackable database, the too widely circulated email, the joking comment to a golf playing partner.
Its a debating forum and should not be a conduit to Inland Revenue.

tim23

29-06-2007, 05:11 PM

Fair comment - I guess there is a fair sprinking of liberty taken on this site - as I've said before I get the impression that Duncan only makes winning plays - lucky him, wish I was always right with my purchases!

Scuffer

29-06-2007, 10:56 PM

Telecom shares should go up in value now they have a scotsman running the show he couldn't be worse than Gattung she lost a fortune and still managed to hang in for all those years,I would have sacked her.Well lets see how this guy goes the scots are known to be thrifty and even the english have got one to run England, got to be good.

hairdresser

04-07-2007, 08:48 AM

Article from Forbes today mentions Telecom as possible takeover target.

"Finally, Telecom Corp. of New Zealand (nyse: NZT - news - people ) is under severe pressure. It has a 6.7% dividend yield. People are scared of the stock because the New Zealand government has been on the attack, threatening to structurally break up the company. I think they will ultimately create a holding company and break up the operating lines under the holding company.

At 10 times earnings stock of telecom Corp. is cheap. If they successfully get through this process with the government, I think the company will easily be taken over."

Link to full story

http://www.forbes.com/2007/07/03/lubrizol-gruma-fisher-pf-ii-in_kf_0703soapbox_inl.html

Snoopy

19-07-2007, 11:36 PM

quote:Originally posted by Phaedrus

TEL is in a "long-term" downtrend.
It is also in a "medium-term" downtrend.
It has been in a "short-term" downtrend all this year.

Downtrending stocks do have a general tendency to drop in price - that's why many people don't like holding them.

Since the unbundling bombshell it has been a great fourteen months for Telecom shareholders. I have been fairly aggressive with my buying of TEL shares and since unbundling my average entry purchase price has been $4.30. With todays close at $4.84 and 42.5c worth of dividends paid in that time, I have made an after tax return of 18.4% annualised over 14 months. All of my buying has been in downtrends: short, medium and long! That is good evidence , if any is needed, that for the long term investor the trend is largely irrelevant. The key is to buy the shares cheaply enough!

Of course I am not telling the full story here as 60% or so of the Telecom shares I hold I bought before that time. My average overall entry buy price is now $5.28. If I add the dividends received just over the last year (42.5c) to today's closing price ($4.84), I get $5.27. That means I am now 'back to square' as if the unbundling bombshell had never happened. Not a bad recovery from one of the nastiest blows delivered to any top ten share in recent years.

It pains me to think of those that did exactly the wrong thing by selling out of TEL at the bottom. They have missed a wonderful ride. Perhaps the above lesson from the great Mr P could do with some amending.

Fundamentally sound downtrending stocks do have a general tendency to drop in price until the market sees it has overreacted and they bounce back again. Thus if you own a fundamentally sound share that plunges it price, you should heavily buy more shares.

Don't worry too much about the trends. The important thing is to add to your stake if the shares are selling cheaply enough.

Ignore what the self proclaimed telecommunications experts, like Roger White, are saying. They are too close to the action to see the big picture.

I think the big bounce in Telecom shares has now happened, but I can see a modest rerating of the share, despite declining earnings over the next couple of years. Frankly I can't think of another NZ share that I would rather have most of my NZ savings in. That is just as well for the largest block of my NZ savings are indeed right here in TEL.

SNOOPY

discl: happy TEL shareholder

Snow Leopard

20-07-2007, 12:01 AM

Phaedrus response:

Imagine a graph of the last 15 months TEL prices with a few colourful lines added
The above graph cleary shows that the time to buy was beginning of last September at $4.21 and that uptrend ended late feb when you would have sold out at $4.91. A lot better return in a shorter time.
Of course you will currently be out of TEL it is in more downtrends than I can count.

MacDunk response:
Snoopy TEL is a dog. I bought something on the ASX, it went up a lot and then I sold it and bought something else and that went up a lot as well. 18.4% in 14 months is nothing, I made that in 14 days.

Paper Tiger response:
Buy MFT.

The BOWMAN

20-07-2007, 12:05 AM

Snoopy

20-07-2007, 09:55 AM

quote:Originally posted by Paper Tiger

Phaedrus response:

Imagine a graph of the last 15 months TEL prices with a few colourful lines added
The above graph cleary shows that the time to buy was beginning of last September at $4.21 and that uptrend ended late feb when you would have sold out at $4.91. A lot better return in a shorter time.
Of course you will currently be out of TEL it is in more downtrends than I can count.

I shouldn't really even be replying to this 'false Phaedrus' response. However we both know his thinking well enough to know that his response would have been something like that ;-P. So I will continue.

My results through owning TEL for the period are exactly that - my results. I make no claim that other people buying at different times may have done better. That isn't the point I am making.

What I am addressing is the claim that buying in downtrends is always a bad idea. I always buy 'value'. Whether the share is in an uptrend, downtrend or a trading range makes no difference to me. The better I know the company the more likely I am to buy in a downtrend. I will always take on the market and back my long term view of the company against any fashionable market voting moment.

Perhaps Phaedrus has done better than me on an annualised return basis with his recent foray into Telecom, and perhaps he hasn't. That isn't he point. The point is you can do everything 'wrong' from a traders perspective and still come up with a good result. The point is the absolutism of some of these 'trader rules' is not as robust as people think - if you are not a trader, and I'm not.

SNOOPY

discl: True long term holder of TEL

Major von Tempsky

20-07-2007, 04:31 PM

Hmm, I'm in significant profit on my last 3 buys into TEL....and as for Phaedrus current TEL downtrends what the eff is he on about, he oughtta look at the price occasionally not to mention the gross dividend yield...

duncan macgregor

28-07-2007, 03:22 PM

quote:Originally posted by Major von Tempsky

Hmm, I'm in significant profit on my last 3 buys into TEL....and as for Phaedrus current TEL downtrends what the eff is he on about, he oughtta look at the price occasionally not to mention the gross dividend yield...
The TEL share price will shrink in unison with the NZ dollar. You had better watch your step Major chicken entrails are coming to get you. I would be a worried boy if the dollar drops holding on to this share. What are your views MAJOR before the event?. Macdunk

Snoopy

29-07-2007, 12:31 AM

quote:Originally posted by duncan macgregor

The TEL share price will shrink in unison with the NZ dollar. You had better watch your step Major chicken entrails are coming to get you. I would be a worried boy if the dollar drops holding on to this share. What are your views MAJOR before the event?. Macdunk

Why take the test when you can go straight to the answer?

Telecom New Zeland is listed in the US under the stock ticker 'NZT'. It trades over there in depository receipts, equivalent to eight of our shares. NZT closed at $US28.67, which was after the further 2c overnight currency slump.

That equates to an equivalent NZ share price of:

( 28.67/8 )/0.766 = $NZ4.68

That is down a couple of cents on Friday's NZ close. Whoopie do.

Of course I'm not claiming Telecom won't drop substantially. If it does hopefully it will hit my 'stop buy' price for the order I put in a few weeks ago. If it doesn't drop that far, I guess I'll just have to live with TEL at these levels, or thereabouts.

SNOOPY

Discl: hold TEL

duncan macgregor

29-07-2007, 08:43 AM

quote:Originally posted by Snoopy

Of course I'm not claiming Telecom won't drop substantially. If it does hopefully it will hit my 'stop buy' price for the order I put in a few weeks ago. If it doesn't drop that far, I guess I'll just have to live with TEL at these levels, or thereabouts.

SNOOPY
Discl: hold TEL

SNOOPY, You must be the only person i know with a stop buy price perhaps you might explain. I take it that it must be the exact opposite of a stop loss sell system. I buy more as a share rises, and sell as a share drops, you do the opposite, but a stop buy[?]/.
Some of your other shares will benefit from a dropping dollar dont you think you should sell down TEL yo add to them. macdunk

warthog

29-07-2007, 09:06 AM

The hog thought that you had fathomed Snoopy's approach by now. If a company generating a certain amount of cash gets cheaper, by definition it is even more attractive than previously, hence the stop-buy. If a company gets too lofty in share price relative to earnings, it could be that the time to sell has arrived and the funds be better employed elsewhere in a company that generates the same revenues but has a lower share price.

Just because the hog groks it doesn't mean the hog wallows in it though ...

duncan macgregor

29-07-2007, 09:20 AM

quote:Originally posted by warthog

The hog thought that you had fathomed Snoopy's approach by now. If a company generating a certain amount of cash gets cheaper, by definition it is even more attractive than previously, hence the stop-buy. If a company gets too lofty in share price relative to earnings, it could be that the time to sell has arrived and the funds be better employed elsewhere in a company that generates the same revenues but has a lower share price.

Just because the hog groks it doesn't mean the hog wallows in it though ...
Not bad for a hog warty. So you reckon our mate SNOOPY only buys shares in downtrends, and gets out if they look like coming good.
Surely it would be SNOOPY wallowing in it, making funny grunting noises that only a person like your good self would understand.
Must be raining at your place as well. :D:DMacdunk

warthog

29-07-2007, 02:42 PM

It was raining all night in the old sty, but the new sty is nice and dry.

Selling out of uptrends and in to downtrends is not a strategy the hog would recommend to anybody, but we're all our own hogs, aren't we?

craic

31-07-2007, 10:48 AM

TEL
31/07/2007
COMCOM

REL: 0939 HRS Telecom Corporation of New Zealand Limited (NS)

COMCOM: TEL: Draft determinations for unbundled local loop

Draft determinations for unbundled local loop

The Commerce Commission has issued its draft determinations on the price and
non-price terms on which Telecom must make unbundled copper local loop and
co-location regulated services available to other telecommunications
providers. These are the services required to unbundle the local loop.

The local loop is the copper telephone wire that runs from a Telecom
telephone exchange to an end-user's premises. Unbundling of the local loop
will allow other telecommunications providers to use Telecom's copper network
to deliver services to their own customers. The associated co-location
service allows other providers to put their local loop equipment in Telecom's
exchange buildings.

The Commission's determinations are complete commercial agreements which will
allow competitors to take the services fr
om Telecom without the need for any
separate agreements.

"These draft determinations are a crucial step in transforming New Zealand's
telecommunications industry," says Telecommunications Commissioner Dr Ross
Patterson.

"It is important to note however that these are only draft determinations,
and further consultation will now be undertaken."

The draft determinations set monthly rental charges for access to the local
loop service at $16.49 per month for urban areas and $32.20 per month for
non-urban areas. The draft charge for the transfer of a customer to the UCLL
service is set at $83.70.

Dr Patterson says the prices in the draft determinations were set using
international benchmarking, as required by the Telecommunications Act.

Submissions on the Commission's draft determinations are sought from
interested parties. The closing date for these submissions is Wednesday 29
August 2007.

After consultation on these draft determinations, final determinations will
be made by the Co
mmission in November 2007.

Telecom will begin to roll out the service two months after the final
determinations are made, and local loop unbundling will progressively be
available six months after the final determinations.

The Commission's determinations can be found on its web site
www.comcom.govt.nz
Local loop:
IndustryRegulation/Telecommunications/StandardTermsDeterminations/UnbundledLo
calLoopService

Snoopy

31-07-2007, 08:29 PM

quote:Originally posted by craic

TEL
31/07/2007
COMCOM

REL: 0939 HRS Telecom Corporation of New Zealand Limited (NS)

COMCOM: TEL: Draft determinations for unbundled local loop

Draft determinations for unbundled local loop

The Commerce Commission has issued its draft determinations on the price and non-price terms on which Telecom must make unbundled copper local loop and co-location regulated services available to other telecommunications providers. These are the services required to unbundle the local loop.

The local loop is the copper telephone wire that runs from a Telecom
telephone exchange to an end-user's premises. Unbundling of the local loop will allow other telecommunications providers to use Telecom's copper network to deliver services to their own customers. The associated co-location service allows other providers to put their local loop equipment in Telecom's exchange buildings.

I have been diving into the detail on the Commerce Commission preliminary ruling by looking at that website reference given by Craic.

http://www.comcom.govt.nz/

I have to admit to being a little confused. AFAIK 'Local loop Unbundling' and 'naked DSL' are different things:

The former is access to the Telecom copper wire system so that other companies can run a 'normal' PSTN telephone service just like default provider Telecom.

The latter is where another company can plug their own equipment into the existing network so that they can offer a differentiated broadband and all the associated downstream products that go with that.

Yet the press release talked about a price for accessing the copper network (i.e local loop unbundling) AND another pricing regime for putting competitor equipment in an existing Telecom box (which I *think* refers to Naked DSL).

So here is my question. Does the pricing revealed today ($NZ16.49 urban and $NZ32.20 non-urban) refer to *only* local loop unbundling, or does that refer to naked DSL as well?

SNOOPY

Snoopy

31-07-2007, 09:21 PM

quote:Originally posted by craic

Draft determinations for unbundled local loop

Now some more specifics on why the price of Telecom shares slipped 11c today.

The split between an 'urban' and a 'rural' access rate was perhaps a surprise to some, but not to me. It is blatently obvious to me that it costs a lot more on a per customer basis to service country folk. The analagous debate on a getting a fair access deal 'for the bush' has been raging in Australia for years. So although Orcon is bleating on about the unprofitability of their 'Eketahuna strategy' with a $NZ32.20 rural access charge, I think such a charge is justified.

The $16.49 urban charge I think short changes Telecom a bit. There is a statistic 'Teledensity' which I think is a representation of concentration of customers. The concentration of customers is obviously a major factor in the cost of servicing them. To get some idea of the effect of this, I list the 'teledensity' (a fraction between zero and one) behind the network access charge below.

In Australia the charge is $A19.70/0.9= $NZ21.89 (TD=0.5020). Granted that is an 'average' over both rural and urban. The equivalent English rate from BT is £6.67/0.37 = $NZ18.02 (TD=0.5329). In Alaska the rate is $US18.75/0.75 = $NZ25.00 (TD=0.2852), while in California the rate is $US11.73/0.75= $NZ15.64 (TD=0.4569). The New Zealand overall teledensity figure is 0.4291. That puts NZ as the 'most rural' of all the areas listed, bar Alaska. Yet the access charge is in NZ is legislated to be the lowest. Now here is where it gets worse....

If we believe Dr Bollard's call that the exchange rate is unsustainably high, then -in global terms- we become even cheaper. Perhaps 20% cheaper than the next lowest comparable country. The cost of copper and network switching equipment is the same worldwide. So how can Telecom sell 'local access' for that much less than anyone else? Perhaps this is why Telecom could be considering spinning off the local loop into a standalone network only company? I don't want to dwell on the exact figures too much. They are preliminary after all, and no doubt Telecom will come out fighting in the next few days! But there does seem to me, to be 'an issue' here. And it doesn't look great for Telecom as they stand at the moment.

SNOOPY

Snoopy

31-07-2007, 09:54 PM

quote:Originally posted by craic

COMCOM: TEL: Draft determinations for unbundled local loop

The 'price for access' has been in the headlines but has anyone else looked at some of the minimum service standards imposed on Telecom by the Commerce Commission?

There are penalty fees payable to the Commerce Commission by Telecom of 7% of the standard monthly service charge if they don't meet certain minmum service standards. Of course no company can get everything right all of the time. There has to be a certain tolerance level for error in a statistical sense. Telecom have offered to keep to their 'fix it' standards 90% of the time, on any compliant received. The Commerce Commission have said that in general this isn't good enough and a 99% success rate is the bottom line standard. Now you may consider the difference between a 90% silver standard and a 99% gold standard 'only 9%'. But I think this is going to be a problem for Telecom. To see why you need to look at some of the guideline standards the Commerce Commission has set.

On receipt of a line quality compliant a manual line test must be performed within five business hours. If a fault is detected it must be restored within three business hours (metro) and eight business hours (rural). I am a Telecom customer and had a fault with my phone, actually two faults if you count the more minor fault (crackling line) six weeks previously, just a month ago. My phone line died completely and I was quoted 48 hours to fix it. This was a business phone and I am located less than 5km from the centre of Christchurch. In the end Telecom got it fixed in 36 hours. But I got the impression there were not enough technicians subcontracted by Telecom to keep the 'normal' winter outages under control. This is in Christchurch remember - not some rural retreat. And how will Telecom hire more teletechnicians if there are no more to be hired?

It looks to me like Telecom will just have to budget on paying quite a few fines. The benchmark standards drafted by the Commerce Commission look to be unattainable under current labour market conditions.

SNOOPY