TEL (Telecom NZ Ltd)

[Major von Tempsky]

Well it certainly wasn't on "tech" which is totally irrelevant and it was one of 2 stories circulating yesterday.
Since TEL has by far the largest turnover on the NZX and is easy to get into and out of on large volume I can't help but think there was a certain amount of manipulation going on. This will be seen if TEL rises again early next week.

The story that it was profit taking was a fill in by brokers scratching for a reason before they read the 2 stories.
Interestingly neither story appears in teh business pages of today's Press but you can read them on pages 410 and 402 of Teletext.

The older story is that the Commerce Commission (which has a permanent down on TEL and totally ignores the rest of the economy - I can't help feeling that the departure of Labour appointed Paula Rebstock is just the first of some "restructuring" that will happen to the Commerce Commission) is going to "regulate" some backhaul routes connecting TEL to its competitors to ensure that they are "competitive".

The second story, which sounds all BS, is that Vodafone is taking TEL to Court because TEL's new mobile phone stuff "is interfering with Vodafone traffic".
Sounds like an admission that Vodafone is very afraid of TEL's new initiatives and this is a desperate attempt to disrupt it. I hope they get costs awarded against them. Makes me recall the Court action by an ASB competitor to stop the Goldstein ad campaign because it was an attack on Jewish people. Quite rightly that effort was summarily thrown out of Court.

[macduffy]

I would have thought it more likely that the drop in the SP was caused by overseas funds reducing their exposure to the NZD following the cut in the OCR.

As M v T points out, Telecom has the biggest turnover on the NZX and for that reason is a favourite for foreigners looking for an equity punt on the NZD. Interest rate movements have often led to high turnover and movement in TEL's SP in the past.

[peat]

a tech analyst might say that it hit the 2.618 Fib extention of the first rise from the low.

[Zaphod]

The second story, which sounds all BS, is that Vodafone is taking TEL to Court because TEL's new mobile phone stuff "is interfering with Vodafone traffic".
Sounds like an admission that Vodafone is very afraid of TEL's new initiatives and this is a desperate attempt to disrupt it. I hope they get costs awarded against them. Makes me recall the Court action by an ASB competitor to stop the Goldstein ad campaign because it was an attack on Jewish people. Quite rightly that effort was summarily thrown out of Court.

The timing is certainly suspicious. Why did Vodafone wait until early May to launch this legal challenge? Why has this issue not been experienced in other countries? Why would NZ Comm's network not cause the same issue?

Vodafone have a lot to fear from the XT network from both a coverage and bandwidth perspective. It will be interesting to see what pricing plans Telecom produce.

[Major von Tempsky]

Anyone know what time NZ the Telecom Q3 announcement is being made in Sydney?

I've bookmarked the page to play the presentation but it's not easy to find what time.

Presumably around 12.30 pm NZ?

[Yossarian]

Results out. Generally ok, but this caught my attention: "For FY10 the level of imputation credits will be nil." Disappointing.

[Betterwork]

To all the naysayers of vodafone, I wouldn't be surprised if Telecoms network is causing issues. How many times in the past have Telecom been useless at getting it right. Even right now I've got issues with my internet because Telecom *did some maintenance*.

I have also been experiencing call dropouts on the vodafone network over the last few months as well as alot of people I know. I thought it was vodafone's network but now it all makes sense.

[Major von Tempsky]

Ha! ha! ha! Join the ranks of all the other special interest groups like Ernie Newman who are paid to Telecom bash. U R just so obvious.

I would like to report that on the occasions I have had Internet problems I have rung Telecom, been surprised how quickly I was attended to and how helpful and on the mark the response has been in sorting the problem. To the point that if I now get one I solve it myself unless its a major system breakdown - pretty rare.

Do you also have a voodoo doll labelled TEL and stick pins in it inbetween attempts at expunging maketu?

[Scuffer]

Telecom for years abused their monopoly but now all is changing they appear to have a caring side and why because they have to nurture every customer because they don't want to lose customers the days of big profits and ripping the average kiwi are gone.

[Deev8]

I would like to report that on the occasions I have had Internet problems I have rung Telecom, been surprised how quickly I was attended to and how helpful and on the mark the response has been in sorting the problem. Last time I had to call Telecom about a broadband outage I was told "If your telephone is working OK, then your broadband must be OK as well". The problem was eventually discovered to be an engineer who didn't re-make a few connections after maintenance work on a roadside cabinet.

[troyvdh]

...wooof.....woooof.......wooooooof..........gnarl .........wof..........

[POSSUM THE CAT]

MVT A garden hose is very useful for expunging the maketu at the local cabinet

[troyvdh]

...this company is an embarresment.....please go, away......

[Jim]

I am very sure my super fund must have some Tel with them. Who have any Vodaphone shares in their portfolio. Vodaphone is so anti-competition. I support TEL and my super. Cheers

[Lego_Man]

Do you also have a voodoo doll labelled TEL and stick pins in it inbetween attempts at expunging maketu?

Not sure about that, but i was thinking of buying a telecom blow-up doll.

[thomaswlg]

They have also agreed on not going to court and have settled on terms not released yet. i also have been having problems with the vodaphone network failing

[Major von Tempsky]

Lego man or leg man....
A Telecom blow-up doll in the likeness of Theresa Gattung?
There's probably a whole heap of them going cheap somewhere....

[Scuffer]

I would buy one, to throw darts at.

[Snow Leopard]

I would buy one, to throw darts at.
Q: What do you call throwing darts at a blow-up doll ?

A: A one hit wonder.

regards
Paper Tiger

[troyvdh]

......wooof.......wooooof.........

[Major von Tempsky]

Don't forget guys - there is some big announcement/presentation from TEL coming up on May 28th.

I must say, after taking the trouble to sit down and listen to their quarterly presentation all the way through, all 3 segments, I thought it was much better and more informative than the newspaper accounts of the quarterly result. All the media seemed to concentrate on was the 9 month result where 2 of the quarters were known already and rather outweighed the result that counted - the last quarter and all the other material.

Still it makes a change from reading the usual ignorant media reports that GM sales are much bigger than NZ's GDP (two totally different concepts - gross sales and net value added GDP , quite apart from the fact they probably no longer do :-) ). Maybe one is only appointed a media "economics" correspondent if one supplies evidence that one has never done anything quantitative at Varsity....

[John]

Can anyone please point me towards where the announcment on the 28th was notified, have been following TEL but seen no mention of that ??

Thanks :-)

[Major von Tempsky]

John, if u listen to the 3 segments of the last quarterly announcement linked here

http://www-waa-akam.thomson-webcast.net/au/dispatching/?event_id=0324cb3ef5bad54ce304ee5ca8c149fa&portal_id=f919f98d285a4d5580ca93e7b2d6c679

you'll find Paul Reynolds mentions an announcement on the 28th several times.
But like you I find it a bit hard to find any corroboration in a Google search.
I guess one just has to be patient :-)

[Major von Tempsky]

Here's the link to the announcements today -

https://investor.telecom.co.nz/phoenix.zhtml?c=91956&p=irol-IRHome

Read Announcements under the heading WHATS NEW.

Looks pretty good to me.

However TEL's register is dominated by overseas domiciled shareholders (well over 50%) who are moved by how the NZ dollar is doing is doing and for whom their TEL holdings are a pretty small proportion of their balance sheet so once again the market is irrational and has dropped 7cps at the time of writing.
But for long term shareholders like me it looks ok with the hope of some co-operation with this government instead of being the continuing victim of continuing socialist ideological prejudice.

salut!

le commandant.

[Steve]

Has anyone got any opinions from using TEL's new network?

[ratkin]

Was at northlands mall today , the telecom shop was jam packed with people , never seen that before , must of been thirty or forty people in there. The vodafone three shops down had two customers.

[Grimy]

No, I'm probably in the 3% who won't get coverage (or fast broadband under the upcoming "roll-out") despite being less than 45 minutes from Queen street.
However, the Telecom shop at Henderson West City mall had a queue of people at the counter when I went past yesterday.

[Grimy]

Well. if interest is high all over, maybe I'll buy some more shares........

[Novitiate]

My son's friends bought a phone on the new network yesterday from a busy Telecom store in Wgtn. He likes that fact that there is a deal where he can txt both networks - even though it's more expensive than $10 and less txts (600). Didn't realise kids were going to be in there buying so early - but the deals are pretty cheap.

[ratkin]

Why are there such big queues at the counters this weekend? Am i missing something, although a telecom shareholder im with vodafone , and their vodafone live been ok for my mobile internet.

Should i be switching to telecom?

[Grimy]

Should i be switching to telecom?
If I buy more Telecom then yes, yes you should!

[mccollr]

As a shareholder it was great to pass six Telecom stores in the weekend and they were all choka block. A real buzz in the air and they were writing business. Long may it last.

Rod

[George]

Be interesting to see today what the sp does.
Up in Aus yesterday a couple of cents but the US dollar
now at 65c which is supposed to be negative for Tel.
George

[ratkin]

Im very optimistic about the future of telecom , their traditional lines buisness may be in decline , but the internet and mobile are becoming just as essential as a home phone was

The roll out of the new faster broadband in the next few months will also be a huge money spinner , telecom will be able to charge a premium for the faster content.

The general population have now embraced the online world , and it all systems go imo

[Jim]

I walk passed Tel shop on Saturday,Sunday and Monday there were a big crowd. The staff were very helpful and there were a queue to buy the new phone. I walk pass Vodaphone shop they were empty just 2 staff look busy or something. I guess the XT is a gonna be a bigger

[Major von Tempsky]

How about the new Government's thinking that the cap on individual shareholding in TEL of 10% should be removed? And that the Kiwi share obligation should be removed?

And as for scumbag of the decade Paula Rebstock getting some gong for doing her best to drive TEL bankrupt while totally ignoring the electric power companies hijinks....Bah!

[beacon]

Hear, hear ...

[George]

Market up yesterday but Tel down, perhaps the exchange rate
does affect it - wonder what happens today as the rate has
plunged 3c.

[Jim]

Check this article out http://www.stuff.co.nz/business/industries/telecoms-it-media/2472400/XT-demand-exceeds-expectations

[whatsup]

YK <The early trades today were unexcutited trades from yesterday afternoon that were not pulled last night.

[macduffy]

Possibly overseas holders getting around to digesting the RBNZ announcement.
1.8m shares traded since.

;)

[COLIN]

A few trades of TEL just before and on open. It's now 11:08 and NO trades since 10:00AM

This seems VERY odd to me.

Any ideas?
Agree, YK. Extremely odd. With TEL being the most actively traded share on NZX, something has intervened. The RBNZ OCR announcement was well out of the way by opening time. We are entitled to an explanation from those who run the market - and this should have been out pronto.

[Major von Tempsky]

Does anyone's heart bleed for Orcon?

They're crying foul because for the first time the Labour Gov't isn't there to force Telecom to subsidise them.

The Commission is finally looking at an acceptable return on all the capital that Telecom has invested in the infrastructure. Result: a 10cps rise in Tel yesterday.

But it looks like the rising NZ $ got in the way today. NZ dollar rises and the majority owners of NZ resident overseas take the profit.

[George]

Ring orcons 0800 number and you will get the most condescending,
pukey answer message ever, pity am still with them.
MVT, with lower dollar overnight, tel should rise altho dow is
down - is this selling by overseas investors going to continue
indefinitely, at what point do you think the sp may rise, it seems
to want to go higher?.
George

[Major von Tempsky]

Problem is that overseas residents and overseas speculators hold so much of Telecom and use it as a proxy for the NZ dollar which I was amazed to see is the 10th most traded currency in the world. Trouble is that this factor dominates TEL trading.

However there have been some good signs lately, success of XT, the squeeze of the recession on their competitors who are less able to stand it, the departure of Paula Rebstock and now the attention for the first time of regulatory authorities to a reasonable return on capital. There have been other easing noises (liberalisation of single ownership cap for example) and thoughts by the new National Government in contrast to Labour which always regarded TEL as the Devil Incarnate, the goose that laid the golden egg that could always be taxed and regulated further.

But the one big factor is the return of full imputation as capital expenditure winds down. There's supposed to be a return of partial imputation next TEL financial year but I see the return of full imputation moving TEL's price up by 50%.

In the end the market cannot argue with brute force in terms of sustainable gross dividend yield comparisons and if it does investors have found the place to put their money in for the best return.

[macduffy]

Problem is that overseas residents and overseas speculators hold so much of Telecom and use it as a proxy for the NZ dollar which I was amazed to see is the 10th most traded currency in the world. Trouble is that this factor dominates TEL trading.



Yes, this has been a big factor in trading TEL from the earliest days.
It shouldn't really surprise that the NZD is such a popular currency trade - unlike a number of bigger economies we have a transparent system, comparatively high interest rates, stable government, a relatively good credit rating, yes, even now, and efficient and strong banks.
A lot of bigger countries fall down on one or more of these criteria.

Edit. My apologies, I've made a mess of the quote, again!

[Major von Tempsky]

So! TEL and Vodafone have put in a joint proposal for the fibre optic cable - wonder if the Nat Gov't dropped them a hint to do that....
Maybe why TEL went up 2cps today while the rest of the market dropped heavily.

[John]

Did anyone else notice the big jump in Telecom at the end of the day, they have hit $2.80 again for the first time in a wee while, not exactly sure why they have spiked in the last minutes of trading, there was a large 2.5million share order placed at 2.80 (which I exited TEL at today)

[Grand Uber]

People jumping into a defensive stock as a correction occurs, maybe to collect the next dividend, maybe something else

All good for Telecom holders like myself, but id say it will all disappear tomorrow

Telecom seems to be holding its very slow but steady uptrend

[Grand Uber]

NZ stocks: Telecom comes to life
New 6:15PM Wednesday Jul 08, 2009

The New Zealand sharemarket came to life as it was closing when someone bought 2.5 million Telecom shares.

The benchmark NZSX-50 index closed up 4.358 points, or 0.159 per cent, at 2750.596. The index was lower before the last minute action in Telecom.

Turnover was worth $119.79 million of which $38.8m was in Telecom shares.

There were 27 rises and 54 falls among the 112 stocks traded.

Brokers said just as the market was closing the order for Telecom shares was placed and "it cleaned up 2.5 million shares".

Telecom closed up 10c, or 3.7 per cent, at 280, the price at which the order was placed.

"It turned the day from a minus day to a positive and turnover is dramatically up," said Stephen Wright at ASB Securities.

Peter Sigley, dealer at Goldman Sachs JBWere, said it was a "market on close" order, which is executed on the close.

"Someone just went in and bid up for a couple of million Telecom shares," he said.

He said it was most likely an institutional investor and he expected the Telecom price to go back down tomorrow as the buyer had filled the order.

The New Zealand market was weak after US stocks fell to their lowest level in 10 weeks as talk of a second government stimulus plan heightened fears that the US economy is not yet on the path to recovery.

The focus is also on the US corporate earnings season starting this week, which is expected to be weak.

Fletcher Building also traded on good volume today, with $21.85m worth of its shares transacted, though the price closed unchanged at 641.

Contact fell 2c to 563 and TrustPower closed down 2c at 750.

The risers included Air NZ, up 2c at 89, Michael Hill, up 1c at 63, Methven, up 2c at 132 and Nuplex, up 2c at 147.

Sanford rose 2c to 530 and Infratil rose 1c to 166.

Mainfreight eased 1c to 425, SkyTV eased 3c to 402 and NZX eased 1c to 719.

Fisher and Paykel Healthcare eased 3c to 286 and the appliances stock eased 1c to 66.

APN News and Media eased 6c to 167.

NZOG eased 4c to 142 and Pike River Coal eased 3c to 112.

AMP fell 15c to 575, Tower fell 1c to 170 and Westpac fell 20c to 2380.

The Dow Jones industrial average dropped 161.27 points, or 1.94 per cent, to 8163.60. The Standard & Poor's 500 Index fell 17.69 points, or 1.97 per cent, to 881.03. The Nasdaq Composite Index lost 41.23 points, or 2.31 per cent, to 1746.17.

[Major von Tempsky]

Well, dropped the 10 cents it gained, but heavy trade and lots of willing buyers.
Presumably the institution that bought 2.5 million shares has a shrewd idea that the Telecom-Vodafone bid will succeed and that the Recession is impacting TEL's smaller weaker competitors fairly heavily.
I was rung twice within 2 hours by some desperate Slingshot salesman who seemed to have a bad phone line connection and a bad accent. I was fairly gentle with him but I can imagine other people will be giving Slingshot a hot ear for ringing them again after they have already said NO.

[bull....]

Telecom sits right on the top of its nearly year long channel a break out above 2.90 would be highly bullish suggesting targets of 3.4 short term.

[George]

Everything seems to be going up but TEL, must be the high dollar?
Still at uptrend support though, when/if it breaks out could zoom!!!

[minimoke]

Everything seems to be going up but TEL, must be the high dollar?
Still at uptrend support though, when/if it breaks out could zoom!!!
Its all well and good having flash telco services but if you don't have linesmen looking after the lines then its all for nothing. Laying their workers off seems a shortsighted move to me.

[Zaphod]

To be quite clear, lines maintenance services have been conducted under contract by third parties for quite some time now, with the two main players being Downer/EDI and Transfield.

Chorus recently awarded a contract for the Auckland and Northland regions to Visionsteam, displacing the incumbent Downer/EDI in Auckland and Transfield in the north. Visionsteam intend to use a new 'owner-operator' model and former Downer/EDI employees and those aligned with them are striking in protest.

[Grand Uber]

Well it looks like telecom broke its trendline (as far as I can see anyway)

From an amature technical point of view it looks like the run is over

[minimoke]

Visionsteam intend to use a new 'owner-operator' model and former Downer/EDI employees and those aligned with them are striking in protest.
And therein lies the problem for telecom. Customers have an agrement with "telecom" to provide services and aren't interested in the subcontractor relationships - but they should be. If they don't get the service they can look for another provider.

I don't think the Visionstream model will work. You can't be a sucessful owner/operator on a $25 callout. If the contractor can't be sucessful then line servies will deteriorate causing more angst amongst customers which will lead them to reconsider their provider which may see custmoers leaving TEL

[modandm]

leave tel to who?

i see this as a great play by tel - despite the uproar by overpaid line men who are used to earning huge sums for working overtime etc.

At the end of the day the market will quickly sort itself out on the pricing of contractor services and tel will have saved millions. the linesmen are the only losers. Hopefully an owner operated model will improve efficiency too - as it has in plenty of other situations.

as an additional benifit - this will further squeeze transfield and downer to price competitively in wellington and chch or see a similair fate.

THIS IS RUTHLESS STRATEGY - GOOD TO SEE!

disc: small holder

[Zaphod]

And therein lies the problem for telecom. Customers have an agrement with "telecom" to provide services and aren't interested in the subcontractor relationships - but they should be. If they don't get the service they can look for another provider.

I don't think the Visionstream model will work. You can't be a sucessful owner/operator on a $25 callout. If the contractor can't be sucessful then line servies will deteriorate causing more angst amongst customers which will lead them to reconsider their provider which may see custmoers leaving TEL

The Unions have been quite vocal about their vehement objection to the model, and have decried the model as putting NZ's telecommunications infrastructure at significant risk of failure. That sort of statement is to be expected, but they have not substantiated that statement.

Overall, I really haven't seen enough of the details of the owner-operator model in order to decide for myself, whether it will work or not.

With regard to your $25 call-out, where did that figure come from?

[John]

The announcment on Friday will be interesting, looking foward to that with some a touch of worry though. Hopefully we'll see some good results from the XT rollout, given the interest I've been seeing in their stores I'm expecting that to be positive.

[Major von Tempsky]

Strange trading these last 2 days - huge volume Wed as if people were expecting a better result and/or wanted the didvidend, then yesterday the volume was right down, up 4 cents at lunch then the Aussies killed it in the afternoon.

Maybe its explained by the usual factors of most holders are overseas and just use it as a NZ $ speculation proxy, or maybe there was a leak which is very common from NZX companies - or whatever, the usual TEL is a puzzle wrapped in a mystery wrapped in an enigma....

Yeah, I'll be watching at 10 a.m. today, all my fingers and toes crossed....will they have enough left over to give 1cps extra dividend....what will they say about when and how much imputation will be restored...

[modandm]

looks bad for tel sp today:

key lines:

guidance -1 to +2 ebitda fy10
no imputation fy10

i personally would have like to have seen some more ambitious growth forecasts over the next year from reynolds.

disc: small holding

[minimoke]

With regard to your $25 call-out, where did that figure come from?
It is one of teh details that probably ought to be more in the public arena.

Part of the deal appears to be to flick the vehicles and gear to the linesman for a peppercorn rate - to set them up.

From there its going to be a bit like a taxi service. A user has a complaint, logs it with dispatch who then send a linesman/ contractor to the job.

The contractor wil then get a scheduled and non negotiable rate for that call out - like $25 (give or take - I dont recall the precise dollar value). So say you have a wire at the wee box at your gate that needs checking - thats $25. The contractor has to work exclusively for the telecom contract so he'll sit around until the next call comes in. If its another wiring fix on the other side of town thats another $25. Modadm might think this is a grossly over paid linesman going about his job. I reckon its not worth gettiing out of bed for.

So what will happen. The contractor (and this is a very dubious defintion in employment and tax law) will work 12 hours a day to try to make a living and then go home at night and do his GST, accounts payable, a bit of invoicing and payroll. Something wil have to give - and I've got my money on service. That wee wire at the box at your front gate got repaired for the time being - wait till the next rain and you've lost your broadband again. Or the skillled contractor will call it quits and leave the technical work to some Zimbawean who doesn't know how to dig a hole in the ground.

[modandm]

wow - how hard is it to fix a line - never takes they guy more than 2 mins when he comes round after rain to fix. you don't exactly need an engineering degree.

can't argue this isnt going to be good for tel

as for declineing service standard this is happening al the time - customers just have to put up with it. see indian callcentres for an example. people still have to use their amex

[minimoke]

wow - how hard is it to fix a line - never takes they guy more than 2 mins when he comes round after rain to fix. you don't exactly need an engineering degree.

can't argue this isnt going to be good for tel

as for declineing service standard this is happening al the time - customers just have to put up with it. see indian callcentres for an example. people still have to use their amexYup, probably don't need an enginnering degree to be a linesman. But then again when the lines go out in the CBD do we want burger flippers in there trying to fix teh problem.

I don't think customers do have to put up with declining standards - infact I think we'll see customers march with their wallets. Check out CEN's results adn see how customers are reckoned to have moved providers. Look at how customers didn't liek the price of fixed line phones and moved to mobile phones. Look at whats happning to say ANZ - and Kiwibank - customers are moving.

There is no point the government spending my taxes on a broadband roll out if I can't access it.

[winner69]

Just been through TEL's results ... My Summary: "TEL is now destroying shareholder wealth at a far slower rate than they were." ;) ... Okay not completely fair I know as its been a big year for them.

discl: hold too many now ;)

Belg ... how can you say that without bursting into laughter

ROIC a good measure of wealth craetion or destruction .... and over the last 12 months invested capital gone up $400m and returns have fallen ... ROIC in 2008 17% (creating lots of wealth) and in 2009 12% (still ahead cost of capital so creating some wealth) ......... not a trend you want to see but doesn't paint a picture of being better (or less worse) as you suggest

[POSSUM THE CAT]

Modandm Had A Chorus technician out a little while back took him about 1.5 hours and was moaning the whole time because I made him do it properly wanted to loop sockets together but I told him No Way fix it properly. He would only need about 3 jobs like this one with travelling 7 at $25 per call he would go broke very quickly you would need to make about $80 per hour to cover your costs remember your van costs $1.50 per KM to operate it.

[modandm]

1. $25 is a silly figure to bandy about no one believes this will be the call out charge.

2. the fact that you knew what he was doing puts you in the .01%th percentile of the population. The rest dont care as long as it works.

3. We are investors in tel here not investors in telecommunications contractors so why all the puppy tears for them? Do we cry for poor FPA chinese workers on $1 a day?

4. We are also (i think) believers in a free market. This change will inprove the efficiency of the market for telecommunication services. This is good for all.

[kizame]

1. $25 is a silly figure to bandy about no one believes this will be the call out charge.

2. the fact that you knew what he was doing puts you in the .01%th percentile of the population. The rest dont care as long as it works.

3. We are investors in tel here not investors in telecommunications contractors so why all the puppy tears for them? Do we cry for poor FPA chinese workers on $1 a day?

4. We are also (i think) believers in a free market. This change will inprove the efficiency of the market for telecommunication services. This is good for all.

In all the time I was with Telecrap,I really don't think they improved anything,in fact my 'all you could eat' broadband plan was a rip off,but I got a months fees returned due to false advertising,and their Indian call centre gentleman lied on at least one occasion to palm me off. They do a huge amount of their business via extortion,as do one or two other utility co's out there. Not a company I will ever have anything to do with in a business sense,nor can I see the attraction(from my point of view)of investing in them.
If they had true competition,they would be history.

[Major von Tempsky]

Strange reply from Kizame....sounds more like a Vodafone employee/TUANZ staffer or one of the multitude of petty broadband offerors who are having trouble making a go of it. I've always had good and prompt service from TEL for broadband/tech problems which is why I stay with them.

It's really poetic justice on the Labour supporters....first of all they TEL bash in every way they can think of so that TEL profits plunge then they can't understand why TEL has to move its call centres to the Philippines & and contract out its work via Transfield.

Either you let TEL make an adequate return on its invested capital so it can afford NZ call centres and tech employees or you put up with Filipino call centres and contracted out work - you can't have it both ways.

It also makes sense to let TEL make an adequate return as the largest listed NZ company if you want to have a functioning stock exchange as an avenue for investment. Will anyone make a large long term investment in anything on an uneven playing field when they suspect the government is going to step in and force them to subsidise all the other players? How about a bit of realism here. Why did TEL get bashed while the electricity companies got away scot free?

[POSSUM THE CAT]

Modandm It will get to the stage that nobody will have a Telephone or Internet that works and then it will progress to the maintenance of cell phone towers you can reduce maintenance only so far. As to telecom I had already spent four hours disconecting and Reconecting phones faxes & computer modems to convince them there was A fault even when they were having to call me on a mobile to talk to me and telling me it would cost $85.00 for technician. When I told them I would see them in court First As I pay you a monthly fee to maintain the house wiring. This was nothing to the fight I had with technician who originally installed the internet. He just wanted to drill hole in ceiling and run bare wire down the wall. I told him it is coming down inside the wall or you can telephone your boss & tell him you are not capable of doing your job. It was A $150 charge to me but he was moaning they were only paying him $65 to do the job and it took about 2 hours and I had to be the boy on the job as there should have been two of them

[kizame]

[QUOTE=Major von Tempsky;269906]Strange reply from Kizame....sounds more like a Vodafone employee/TUANZ staffer or one of the multitude of petty broadband offerors who are having trouble making a go of it. I've always had good and prompt service from TEL for broadband/tech problems which is why I stay with them.

Not at all Major, just a very disgruntled (at the time) Telecom customer,from my experiences it has influenced me enough to decide never use them directly again.
Of course at the moment doesn't matter whom you use,you are still paying them the line rental.
If you can't get service that you perceive to be good value at any retail outlet,you just wouldn't shop there would you.Even though I cut all direct ties with them,they still get a good cut from my line rental.They also control bandwidth.

[George]

Dollar over 68, wonder how that will affect Tel sp now?
Aussie chart now shows a break of uptrend.

[COLIN]

Strange reply from Kizame....sounds more like a Vodafone employee/TUANZ staffer or one of the multitude of petty broadband offerors who are having trouble making a go of it. I've always had good and prompt service from TEL for broadband/tech problems which is why I stay with them.

It's really poetic justice on the Labour supporters....first of all they TEL bash in every way they can think of so that TEL profits plunge then they can't understand why TEL has to move its call centres to the Philippines & and contract out its work via Transfield.

Either you let TEL make an adequate return on its invested capital so it can afford NZ call centres and tech employees or you put up with Filipino call centres and contracted out work - you can't have it both ways.

It also makes sense to let TEL make an adequate return as the largest listed NZ company if you want to have a functioning stock exchange as an avenue for investment. Will anyone make a large long term investment in anything on an uneven playing field when they suspect the government is going to step in and force them to subsidise all the other players? How about a bit of realism here. Why did TEL get bashed while the electricity companies got away scot free?
Major: The points you make are valid, and part of the reason why I wouldn't want to hold any TEL (and hope that you, too, have sold out). I do admit to having bought a few during the very uncertain times of the past 18 months, on the grounds of its being a defensive stock with a good (imputed) dividend yield, when so many of the alternatives seemed shaky, but ditched them a couple of months ago when I was convinced that the global economy was entering its recovery phase. Stocks such as CAV, FBU, NPX (to name just a few) have left TEL in the dust.
TEL is everyone's whipping boy - pesky competition, Government interference, public moaning .........they can't win.

[duncan macgregor]

TEL are about to pay one employee five million dollars at the same time the company has a strike by the tradesmen to try to have a living wage. Greed and corruption knows no boundaries it seems. I was once ridiculed by MVT for saying the TEL sp would hit three dollars before it hit five dollars. He won that one, but now that the SP is under $3-00 I say the SP will hit $2-00 before it hits $3-00. Straight out blatant greed is the downfall of any company especially one with fast declining profits. Macdunk

[PartTimeTrader]

5 Million seems like a lot and it is. But I happen to think it has some merit.

Under Paul, Telecom has improved it's image significantly. Under Teresa, Telecom had become one of the most hated companies in NZ. He has also handled the regulatory changes well.

I too will take the bet that it hits $3 before it hits $2.

I have to agree with this comment by MvT


It's really poetic justice on the Labour supporters....first of all they TEL bash in every way they can think of so that TEL profits plunge then they can't understand why TEL has to move its call centres to the Philippines & and contract out its work via Transfield.

Telecom isn't a charity and nobody invests in a charity. If you want good performance from Telecom's SP, you have to expect Telecom to maximise their return on investment.

[Yossarian]

TEL wholesale's BB/PSTN offers have been shot down by the Independent Oversight Group. Will be interesting to see how this plays out in the media and the share price!!

[Yossarian]

TEL wholesale's BB/PSTN offers have been shot down by the Independent Oversight Group. Will be interesting to see how this plays out in the media and the share price!!

no change whatsoever in the SP so far!

[Hoop]

TEL are about to pay one employee five million dollars at the same time the company has a strike by the tradesmen to try to have a living wage. Greed and corruption knows no boundaries it seems. I was once ridiculed by MVT for saying the TEL sp would hit three dollars before it hit five dollars. He won that one, but now that the SP is under $3-00 I say the SP will hit $2-00 before it hits $3-00. Straight out blatant greed is the downfall of any company especially one with fast declining profits. Macdunk

Monoply creates greed and its hard habit to break.

TiVO..another opportunity to gain broadband market share wasted!!..Telecom should be using a "lost leader" marketing strategy approach, (eg a dairy selling cheap milk to get customers into their shops) but the infrastructure won't cope with the extra demand

Again!!!.the consumer is screwed, cursing Telecom it should have, and be spending its money on updating infrastructure instead of feeding it to the pigs.

"We won't allow competition, its an exclusive deal".. I hear Telecom telling you ........HAH!!!!...delusional monopolistic thinking.

Who cares ??........ I have MySKY HD, Big HDTV, Freeview and a Play Station 3 that's enough.

PS3 ???.... yep..using the same old "watch one, record 2 channels" format (PVR Functions)... Sony is to introduce internet TV PVR in Europe selling their clip-on box to the PS3 (http://www.webtvwire.com/playtv-pvr-digital-tv-on-ps3-psp-video-downloads-possible-ps3-iptv-service/)..... and guess what?...Forgot to record your favourite programs while you are away on your overseas holiday?...no worries... you can also do a MySKY trick with it as well, talk to your box through the internet.. but the neat thing is with the PS3 you can talk to it from the other side of the world not only through a computer but also via your hand held PSP in a hotspot area.

All this kinda makes Telecoms expensive TiVO box look rather ordinary already.

Only a matter of time for the competition to hot up in the internet PVR area striking deals with other internet providers....Microsoft and their X-box won't lie down and let this happen without them either.

Another happy "hate Telecom" customer :D

[Zaphod]

Monoply creates greed and its hard habit to break.

TiVO..another opportunity to gain broadband market share wasted!!..Telecom should be using a "lost leader" marketing strategy approach, (eg a dairy selling cheap milk to get customers into their shops) but the infrastructure won't cope with the extra demand


Telecom don't own the TiVO service, they've simply partnered with TVNZ who have bought into Hybrid Media Services Ltd, so they are relatively limited in what type of "lost leader" they can offer.

Also in terms of performance, TiVO requires around 1.5Mbps on the downstream channel, which is easily achieved on most NZ broadband connections. Maybe the introduction of this service will lower the total volume of traffic dedicated to illegal P2P fileshareing? Who knows....



Again!!!.the consumer is screwed, cursing Telecom it should have, and be spending its money on updating infrastructure instead of feeding it to the pigs.

"We won't allow competition, its an exclusive deal".. I hear Telecom telling you ........HAH!!!!...delusional monopolistic thinking.

It's not exclusive to Telecom; you can use TiVO on ANY ISP, it's just that Telecom have decided that data transferred for the TiVO service will not be counted against the monthly data cap. There's nothing to stop other carriers from doing the same.



PS3 ???.... yep..using the same old "watch one, record 2 channels" format (PVR Functions)... Sony is to introduce internet TV PVR in Europe selling their clip-on box to the PS3 (http://www.webtvwire.com/playtv-pvr-digital-tv-on-ps3-psp-video-downloads-possible-ps3-iptv-service/)..... and guess what?...Forgot to record your favourite programs while you are away on your overseas holiday?...no worries... you can also do a MySKY trick with it as well, talk to your box through the internet.. but the neat thing is with the PS3 you can talk to it from the other side of the world not only through a computer but also via your hand held PSP in a hotspot area.

All this kinda makes Telecoms expensive TiVO box look rather ordinary already.

Only a matter of time for the competition to hot up in the internet PVR area striking deals with other internet providers....Microsoft and their X-box won't lie down and let this happen without them either.

Another happy "hate Telecom" customer :D

Do you know exactly what model they are selling in NZ? If it's the US version then remote playback via the Internet is possible.

[minimoke]

It's not exclusive to Telecom; you can use TiVO on ANY ISP, it's just that Telecom have decided that data transferred for the TiVO service will not be counted against the monthly data cap. There's nothing to stop other carriers from doing the same.

As I understand it, it is pretty much exclusive to Telecom. A TiVO user will be able to get their EPG from other ISPs but thats about it: no downloaded movies, no pay-per-view, no TV shows.

I'm not sure this is a good move for Telecom for a couple of reasons.
All downloaded content (expcept pay-per view) wil be "free" for telecom account holders. This means broadband users will use mega giga bytes for no revenue to telecom.

While TiVo users get mega gigabytes for free - existing telecom customers have to pay for their data caps and throttling. More customer disatisfaction.

Walk into a Telecom store and ask them about the technical apsects of their products and they often fail. And when the product goes wrong its off to Malaysia (or wherever for support). Telecom will now have to upskill retail staff on the complexities of Freeview, PVR's and how to set up their TV. All for a product whcih can't have a huge margine on it since its priced around the same level as other PVR's.

As an aside I'm not so sure that as a tax payer I'm so impressed with TVNZ buying TV and then releasing it on a monoploy basis to Telecom. Surely its someting that could just as easily be retailed through Harvey Norman, Dick Smith et and then leave it to the ISPs to work out what content they will provide at what price.

[ratkin]

My concern about this , is that all these TIVO users will slow down the broadband for the rest of us.

[Zaphod]

As I understand it, it is pretty much exclusive to Telecom. A TiVO user will be able to get their EPG from other ISPs but thats about it: no downloaded movies, no pay-per-view, no TV shows.


The only part that is exclusive to Telecom customers is the pay-per-view content.



I'm not sure this is a good move for Telecom for a couple of reasons.
All downloaded content (expcept pay-per view) wil be "free" for telecom account holders. This means broadband users will use mega giga bytes for no revenue to telecom.

Presumably, Telecom are getting a cut from the sales of the devices, as well as hoping to attracting new customers to their broadband services.


In terms of using mega gigabytes, I suspect content will be cached at the exchanges and perhaps in the broadband cabinets, similar to how mobile phone content is cached at most cell towers.




While TiVo users get mega gigabytes for free - existing telecom customers have to pay for their data caps and throttling. More customer disatisfaction.


TelstraClear implemented a similar service in 2008, so that their customers can stream video and surf various websites at zero rated traffic. You can have a look here: http://clearnet.co.nz/video.html



Walk into a Telecom store and ask them about the technical apsects of their products and they often fail. And when the product goes wrong its off to Malaysia (or wherever for support). Telecom will now have to upskill retail staff on the complexities of Freeview, PVR's and how to set up their TV. All for a product whcih can't have a huge margine on it since its priced around the same level as other PVR's.


This could definitely be an issue. Hopefully the resellers will provide their staff some decent customer training!

As for the exact margin I really do not know, however the box does seem quite expensive on the face of things.

[minimoke]

The only part that is exclusive to Telecom customers is the pay-per-view content.

As i understand it, telcom will be delivering, exclusively the broadband content - except the EPG which any ISP can provide. Providing you have a broadband jackpoint in your lounge or want to run cables or pay for a chorus contractor install. The broadband content is the pay-per-view but also, with the help of advertisers, broadband movies and broadband tv shows.

Other than that I'm not sure TiVO offers your average TV watcher much that can't be gained from elsewhere. Sure Season Pass might be useful and Wish list might be fun - but if you have 10 channels of shiit on the TV to choose from then TiVo aint going to solve that. There are other PVR's in the market around this price point and most people will do just as well getting their heads around Freview let alone TiVo.

I smell another Ferritt in the Telecom house.

[minimoke]

Hardly! Chalk and cheese.
Retailing what is essentially a Freeview HD terrestrial STB and a hard drive recorder (and a poxy 160gb one at that) seems removed from telecom business - more like Noel Leeming and Harvey Norman. No revenue off the free broadband downloads so isn't a revenue stream. TiVO get the revenue from the downloaded movies, TVNZ gets the revenue off the advertising. Telecom gets the margins on the sale of a STB. Say $300 a box by 7,000 sales (Australia has only managed around 35,000 with their population) = a couple of $m gross. Doesn't sound like Telecom business to me nor is it likely to be worth it.

[troyvdh]

...wooof...wooof...woooooofff......gnarl....woof.. ...

[mccollr]

In the meantime another 6 cents divy for the last quarter.

[Jim]

Pay yours' and mine phone and internet bills.

[modandm]

i think this is a great move from telecom - even if it is not a huge mass market hit and revenue earner. In the meduim term it is technology like this willome more and more common. Things like fully wired up computer controlled homes with video calling and tv over the internet are just the start.

Its shamefull how slow these technologies have been rolled out so far.
Thinking back to 1985 back to the future showed 'futuristic' wired up homes of this sort. In my mind there is no better positioned company in NZ than Telecom to bring this technology to market in every household. Especially as time progresses and gen yers share of consumption increases demand for technology will increase.

Smartphones just an example. there will be no txting in 5 years all will have smartphones with email. The IT landscape is ready for a revoloution and the TV landscape is long overdue

I RATE TEL AS LONG TERM BUY

[bung5]

i think this is a great move from telecom - even if it is not a huge mass market hit and revenue earner. In the meduim term it is technology like this willome more and more common. Things like fully wired up computer controlled homes with video calling and tv over the internet are just the start.

Its shamefull how slow these technologies have been rolled out so far.
Thinking back to 1985 back to the future showed 'futuristic' wired up homes of this sort. In my mind there is no better positioned company in NZ than Telecom to bring this technology to market in every household. Especially as time progresses and gen yers share of consumption increases demand for technology will increase.

Smartphones just an example. there will be no txting in 5 years all will have smartphones with email. The IT landscape is ready for a revoloution and the TV landscape is long overdue

I RATE TEL AS LONG TERM BUY

I don't know why you rate telecom as a long term buy . There core business is telephony which is dying technology. Sure they do broadband but in the years ahead there will be a lot more competition especially with the government investing into the fibre network which will be the same type of investment as the copper network was 50 years ago that made telecom all that money.
VOIP will take over soon enough and new networks rolled out and the monopoly/market share will be gone.

[Hoop]

...

.....I RATE TEL AS LONG TERM BUY

Hmmm.... TEL a long term buy??? Hmmm maybe, maybe not..depends on a heap of variables.
Ideally though I agree more with Bung5 (except the fibre network profitability part)

Tech is moving at an accelerating pace There are some very fast moving competitors out in the world and kinda makes TEL look like a slug in comparison at the moment ....but you never know what may happen in the future.

What we do know is that the Vision is real enough ..The objective!!...To network all the people in the world together via some sort of communication internet structure!!

This vision was foresaw years ago ..TEL too busy doing nothing to futureproof their business......but they had a valid argument which they could not convince anyone at the time..... why should a monopoly car-maker be liable to upgrade the nations roads just because their and others improving, faster cars can't handle the current state of those roads.

Quick answer they shouldn't have to.....but...ahhh ...what would've happened if they helped the tax payer to maintain those roads?

In hindsight Telecom as a then Monopoly should have played a different role game to protect it's monopolistic position. It should have used the Beneficial Monopoly option (e.g Microsoft (http://www.scribd.com/doc/13937459/Microsoft-Beneficial-Monopoly)), rather than the dictatorial monopoly (lets p1.ss everyone off) role

Does it matter who owns the infrastructure in the Future? Yes I think so....the last 60 years up to 1990 copper wire with slow technological advancement in that area made infrastructure very profitable. Since 1990 communication infrastructure may be becoming an increasing liability with rapid obsolescent, more expensive replacements, the constant expensive upgrading to meet the ever increasing customer demand and rapidly increasing data flow and the need to deliver it at an ever increasing faster rate, etc.

I would have thought its who ever holds dominant market share accessing into that infrastructure that counts (profitable) as well as those surrounding services that make use and maintain that network.

TEL is not doing a very good job in this department as it has self made hurdles in its way. Using its dictatorial monopolistic powers in an aggressive mode and playing hardball these last few years with the Govt has not won them any favours today and has created too many powerful enemies determined to end its monopoly powers (opportunity lost).

I would have thought TEL would use TiVO as another clip on service and market it as an beneficial opportunity to increase and widen its customer base into accessing the world communication network. Making TiVO an expensive entry for the public is plain stupid.

[chippy52]

The axe has already been through the local branch.

[Zaphod]

As i understand it, telcom will be delivering, exclusively the broadband content - except the EPG which any ISP can provide. Providing you have a broadband jackpoint in your lounge or want to run cables or pay for a chorus contractor install. The broadband content is the pay-per-view but also, with the help of advertisers, broadband movies and broadband tv shows.

Other than that I'm not sure TiVO offers your average TV watcher much that can't be gained from elsewhere. Sure Season Pass might be useful and Wish list might be fun - but if you have 10 channels of shiit on the TV to choose from then TiVo aint going to solve that. There are other PVR's in the market around this price point and most people will do just as well getting their heads around Freview let alone TiVo.

I smell another Ferritt in the Telecom house.

Well the device has certainly taken off in the US, which is where I gained my first experience with it. That of course was before the time low-cost DVR's were available, so it will be interesting to see what NZ'ers think of the device and the rental service.

Does anyone know the revenue Sky gain from the pay-per-view movies service?

[Zaphod]

VOIP will take over soon enough and new networks rolled out and the monopoly/market share will be gone.

VOIP will most definitely be rolled out, however IMO it is likely to be provided on lines running valued added services such as end-to-end Quality Of Service (QOS) in order to provide the customer an experience much more in-keeping with that which they receive from the more traditional analogue and digital lines of today.

I am however much more up-beat about the technology than the SP; there's a lot of issues left for TEL to resolve yet.

[bung5]

VOIP will most definitely be rolled out, however IMO it is likely to be provided on lines running valued added services such as end-to-end Quality Of Service (QOS) in order to provide the customer an experience much more in-keeping with that which they receive from the more traditional analogue and digital lines of today.

I am however much more up-beat about the technology than the SP; there's a lot of issues left for TEL to resolve yet.

This is true but I have been using a VOIP phone running over skype for nearly a year. It cost $100 a year for the local number and a fraction of the cost to make any calls. I can not tell the difference between my previous fixed line.
The QOS that skype and my router provides works a treat.
The only kicker is when/if the power goes out I do not have a phone.

Telecom would not be able to justify charging what they currently do just for some added service. I am sure you will alot of other providers popping up in the coming years offering a better cheaper service.

[minimoke]

Well the device has certainly taken off in the US, which is where I gained my first experience with it.

Below is an article that came out about a year ago on Australian sales. That was on the back of Harvey Norman being pleased with exclusive sales which were being made during the High Definition broadcasts of the olympics - nothing like that to help TEL with their launch here, and prior to the range of PVR's now on the market.

In Australia Tivo is now sold through Harvey Norman, Dick Smith and JB Hi Fi (and I'd imagine their retail footprint in NZ would be significantly higher than TEL's) plus the Good Guys, David Jones, Domayne. Wheres a telco in that supply chain?

I see this as a flop for TVNZ (I'd prefer they spent the money on getting the audio on Freeview sorted first) and a flop for TEL.



TiVO Launch Flops In Australia.
The much anticipated launch of TIVO in Australia has been a disaster, with sales a proverbial lone firecracker in comparison to the full-on pyrotechnics display they were budgeting for. The product has been plagued with problems from the start in product composition, distribution, & Pricing. This has led to growing speculation that seven media is going to drop the once revolutionary TIVO product. So what went wrong with their marketing plan?

Product composition
The main reason for purchasing TIVO is to cut out ads & record television to a hard drive...they fail to satisfy this need. The product only works on free to air television in Australia, can only record 32 hours of HD TV or 64 hours SD TV.

Distribution
A key success factor of the technology market is distribution. The purchase decision for some consumers is an impulse, for others it is a convenience and for the rest it is a luxury item. This means that by having a wide distribution (all the major distributors JB, Harvy Norman, Dick Smith), you can attract the early adopters (groups 1 & 2) with minimal effort. JB hifi refused to stock TIVO, leaving Harvey Norman to go it along. Major problems!

Pricing
First mover advantage is worth a lot in the technology market, usually price skimming tactics target early adopters and helps to fill the coffers quickly (pay off the advertising budget), yet without satisfying key success factors like distribution, price skimming restricts many from purchasing it and leaves you with no sales and in need of a clearance sale to move the stock.

TIVO came into the market prices at $699 retail. In comparison, "Nero who has been around longer than Tivo said that consumers who already have a tuner-equipped PC, can buy similar software for around $99. Buyers will also get a one-year subscription to TiVo's program guide updates. Renewal will cost $99 per year".(Smart House (http://www.smarthouse.com.au/Home_Cinema/Set_Top_Boxes/L9A2B6L9))

Josh Strawczynski's Opinion
Sensational flop! They really are trading off their name at this point, one that obviously does no have as much carry in Aus as in the USA. Don't forget that TIVO got big because it came with pay TV in the US, here you have to fork out your hard earned folding stuff to get it. The product will not be generating too many favorable reviews and I doubt many referals will come of it.

Sam Berringer's Opinion
I was really looking forward to TIVO being launched in Australia, but like many marketing strategies, this one has failed to deliver. I doubt that they are down and out, but if I were in that board room, I would be cutting prices and adopting a new positioning strategy ASAP!

[Hoop]

Below is an article that came out about a year ago on Australian sales....

Sam Berringer's Opinion
I was really looking forward to TIVO being launched in Australia, but like many marketing strategies, this one has failed to deliver. I doubt that they are down and out, but if I were in that board room, I would be cutting prices and adopting a new positioning strategy ASAP!

Here ..Here ..Sam..we think alike.

Nice article Minimoke...



TEL management must be suffering from deaf/blind disease. Suggest they all take sick leave.

...as for TEL marketing department..their sandpit needs new sand

[Hoop]

It's difficult to see how Telecom could actually lose from this, even if they don't make as much as they would like. All they are doing is providing an additional means (the internet) of delivering TV content. I would think that Telecom's management have worked how they are going to make money out of it if it takes off.
hiawatha

TEL management under estimates the intelligence of the early adopter market as these would be the only people who get in first... OK these people pay above average price to be first in so in theory TEL can do its profit skimming strategy off these people...But ...it has to be novel. It has to be cutting edge stuff ..eg the introduction of the PS3 back in late 2006 with a blue ray player/ internet capable box.

TiVO is not cutting edge technology its been around for nearly 10 years. it has since transformed into another PRV box that can be hooked up to the internet as well ..but again this technology is 4 to 5 years old now and many homes in NZ already have 2 PRV boxes (Mysky and Freeview)

So why should I (early adopter) pay nearly $1000 to TEL to receive what I can already get....The only appeal is the no data cap on the internet. Most countries have service providers with no data caps ...so only a matter of time now for NZ.

Now...if TEL offered this technology to me 8 years ago ..different story..I would have bought it.

[kizame]

TEL management under estimates the intelligence of the early adopter market as these would be the only people who get in first... OK these people pay above average price to be first in so in theory TEL can do its profit skimming strategy off these people...But ...it has to be novel. It has to be cutting edge stuff ..eg the introduction of the PS3 back in late 2006 with a blue ray player/ internet capable box.

TiVO is not cutting edge technology its been around for nearly 10 years. it has since transformed into another PRV box that can be hooked up to the internet as well ..but again this technology is 4 to 5 years old now and many homes in NZ already have 2 PRV boxes (Mysky and Freeview)

So why should I (early adopter) pay nearly $1000 to TEL to receive what I can already get....The only appeal is the no data cap on the internet. Most countries have service providers with no data caps ...so only a matter of time now for NZ.

Now...if TEL offered this technology to me 8 years ago ..different story..I would have bought it.

Unlimited data ia all very well,mine is 100 gigabytes,but if you don't have the internet speed to make use of it,whats the point.

[ratkin]

Cant see this TIVO catching on, i never heard anyone mention it, going be a big flop

[Zaphod]

I see this as a flop for TVNZ (I'd prefer they spent the money on getting the audio on Freeview sorted first) and a flop for TEL.

Neither Australia nor New Zealand have the same viewer-ship of TV as the USA, so in all likelihood it will definitely less of a success here.



TiVO Launch Flops In Australia.
The much anticipated launch of TIVO in Australia has been a disaster, with sales a proverbial lone firecracker in comparison to the full-on pyrotechnics display they were budgeting for. The product has been plagued with problems from the start in product composition, distribution, & Pricing. This has led to growing speculation that seven media is going to drop the once revolutionary TIVO product.
Which is why TVNZ in particular better have a great marketing plan as well as support infrastructure, which I somehow doubt. Let's just hope TEL have done their due diligence on this deal.

[minimoke]

I don't think that the profit that they would make selling TiVO boxes is really the point. No matter how many they sold the profit would be peanuts in the Telecom scale of things. For this to be worthwhile they would have to be making a profit from the supply of movies and TV shows via the internet.

Its probably worth reflecting on the TiVO chain. At the end of it you have the consumer who will spend $900 on a box which, arugably, other $900 boxes can do pretty much they same thing. The consumer can down load pay-per-view movies and TV shows. But so can SKY subscribers; those that visit their video shops and people with PC's that can access resources like TVNZ on Demand. TiVO owners will be able to access FreeView High Defintion TV (provided they live in a major metroplitian area and not in one of the black spots that are found in places like Auckland). But then they can do this by spending $250 on a Freeview HD box (and 99% of the content isn't HD anyway). Consumers will be able to record one TV show while watching another (presuming the shows aren't broadcast on the same mux) - just like other PVR's that are out there. Had TiVO been new technology the Early Adopters might have been interested - it's not so they won't be. That leaves the consumer with loads of choice and will inevitably see prices of all Boxes drop. So the consumer benifits here.

Next down the chain is TEL - they are the store front reseller of TiVO boxes. The will get their gross income from the $900 sale of the box (soon to be $599). Their margin on this will be eroded by marketing and sales leaving them in a loss situation. They will also get revenue from Non-telecom broadband users who will be so blown away by the wonders of TiVO that they will ditch their existing provider and flock in droves to TEL for the free download content. So Telecom has two income streams - sales of boxes and new / retained broadband customers (provided those customers live in large urban areas and can access Prime TV on UHF aerial). Theres a third incidental income stream which will come via Chorus as owners ring their new friendly contractor to put a broadband jack point in their lounge (for say $150) so TiVo actually has something to connect to. TEL will not get any revenue from Pay-per-view content, nor advertsing funded content.

Then we have TVNZ. They own 1/3rd of TiVO, with the other 2/3s owned by Australias Channel Seven Network (Hybrid Television Services ANZ Pty Ltd) . They will make their money from the pay-per-view movies and tv shows as well as the advertising funded content and the sale of TiVO boxes. How much more can TVNZ invest in TivO - not much since they cann't afford to run Days of Our Lives ( a daytime soap that has to be dirt cheap to air) nor the telecast of the Commonwealth Games. TVNZ doesn't even have the cash to broadcast High Definiton audio content on their existing TV channels and HD video is very limited compared with TV3 (which also has bugger all). So we have a cash strapped State Broadcaster investing in old technology into a limited market.

And finally we have Tivo Inc, an American company who sells the TIVO technology liscences. Its doing extra market leading stuff like music downloads and showing your photos on TV.

TivO and TEL will crash and burn here in NZ. Its simply a distraction that TEL can ill afford. If there is any doubt check out TiVO's NZ marketing: "Get ready to feel the TivO Love". Christchurch people will just chuckle as we've been inundated with the "Love Your Rubbish" recycling waste management campaign. People in marketing need to realise there is only so much "Love" for rubbish to go around.

[minimoke]

So Telecom will be allowing TVNZ and subscribers to use their broadband facility FOC? That seems rather odd for an allegedly money grubbing lot like Telecom.
hiawatha
It looks like it - and thats the bit I can't figure out. TEL might be reckoning they will make up for the lost chargeable gigabite traffic with the margin they'll get off box sales, new broadband customers and early adopters paying a premium before the price plummets. Unless TEL plan to make the downloads free for a while and then charge like a wounded bull after that - but they reckon thats not the case.

[minimoke]

How much more can TVNZ invest in TivO - not much since they cann't afford to run ......
News out today - TVNZ profit down 89% to $2m. If TEL are hoping for further investment/expenditure in TiVO by its NZ liscense holders they are dreaming.

[Zaphod]

It looks like it - and thats the bit I can't figure out. TEL might be reckoning they will make up for the lost chargeable gigabite traffic with the margin they'll get off box sales, new broadband customers and early adopters paying a premium before the price plummets. Unless TEL plan to make the downloads free for a while and then charge like a wounded bull after that - but they reckon thats not the case.


They are probably distributing/caching content locally within NZ, meaning that data traffic cost to them is negligible.

[Zaphod]

That's what they get for putting profit ahead of quality programming.
hiawatha

I sometimes get the feeling that they have chosen their programming line-up based on cost alone. Some of it is absolutely atrocious.

[minimoke]

TivO and TEL will crash and burn here in NZ. Its simply a distraction that TEL can ill afford.
AGM day today so what are the distractions:
- Chorus engineers protesting and VisionStream likely to back down on forcing employees out and setting up contractors.
- 18+ day delays in repairing faults in Northland
- rural broadband looks set to cost TEL $340m over the next six years
- 44% drop in net profit
- new XT network ads voted as "worst in NZ"
- lost top NZX slot to FBU
- and for this the CEO gets a $1.3m performance incentive (strange I would have thought keeping his job would have been incentive enough) and a $3m bonus.

[Major von Tempsky]

e.g. "rural broadband is likely to cost TEL $340 mill" - read the other statements by various people in the media as I have and you'll see that it's not likely to cost TEL anything in terms of lowering its profit. That piece you're referring to was written by yet another financially illiterate reporter who hadn't bothered looking at the whole picture.

Also I disagree on your take on what's happening/likely to happen on the Visionstream independent contractors thing - only one third of the people carrying out this activity for TEL were/are unionised and the move is progressing steadily.

[sharer]

TEL statement quoted in Dominion this morning said Visionhire now have 90-95% of the staff they require. Talks going on. Contradictory statements about possible intimidation or stand overs in Whangerei.
No news at all about what happens in the other two thirds of the country.
Looks likely with face saving all round it could be normal business next week.

Chairman Boyd's floundering about trying to justify the ridiculous payments to top executive(s) only confirms how wrong they are, & how impossible it is to get this problem corrected in NZ. Place for external assessors maybe?

[Jim]

Foreign funds getting out ???

[John]

Can anyone please explain for me the percieved impact and effect of a rising nz dollar on TEL's shareprice. I've never really got my head around it but should as I am sitting on quite a few.

Thanks

John.

[bung5]

Can anyone please explain for me the percieved impact and effect of a rising nz dollar on TEL's shareprice. I've never really got my head around it but should as I am sitting on quite a few.

Thanks

John.

Mainly more expensive for foreign investors to bring money in.

[bung5]

and good for them to take it out..

[George]

SP seems to be holding up well considering all the negative
news and the higher dollar. If dollar reverses and hopefully,
all the bad news is out about TEL, then sp may get over 3 bucks.
George

[minimoke]

If dollar reverses and hopefully,
all the bad news is out about TEL, then sp may get over 3 bucks.
George
Perhaps - but which decade?

[macduffy]

Can anyone please explain for me the percieved impact and effect of a rising nz dollar on TEL's shareprice. I've never really got my head around it but should as I am sitting on quite a few.

Thanks

John.

There used to be a theory that overseas funds buy an uptrending NZD as a currency play and invest in TEL for a high yield. They then sell as the currency weakens to take their profits, both on the currency and, hopefully, on the shares. TEL is practically the only NZ stock which trades in sufficient volume for bigger players to do this.

I must admit that I havn't checked the validity of this recently but it may be worth looking into if you have a significant stake in TEL.

[Ash]

There used to be a theory that overseas funds buy an uptrending NZD as a currency play and invest in TEL for a high yield. They then sell as the currency weakens to take their profits, both on the currency and, hopefully, on the shares. TEL is practically the only NZ stock which trades in sufficient volume for bigger players to do this.

I must admit that I havn't checked the validity of this recently but it may be worth looking into if you have a significant stake in TEL.


Macduffy...

The above makes sense and with the high inflation data of 1.7% (than anticipated) released today, will push NZD higher. OCR rate increase more likely towards the end of the year or early 2010 with overseas investors finding NZ $$ more and more attractive...

[futurist]

TEL has been down recently and now selling at $2.49, lowest point since May while the share market in general is not doing that bad in the same period.

Any insight or comment? Appreciated.

[sharer]

Government announcements about their national broadband schemes seem to be increasingly negative for TEL's plans & ? undermine TEL investment.

Recent DomPost report that govt would require TEL to quit >= 51% of Chorus. Is that actually the case?

[winner69]

TEL is being battered big time. The suggestion that the OCR will rise may be making TEL's yeild look much less atractive. And, of course, the analysts are saying TEL revenues will continue to fall.

discl: Stop bounced me out. Hold none. Target buy placed.

Belg ... how the hell did you manage to get 'stopped' out of TEL on a relatively low drop today?

Just curious

[George]

Wish I had followed yr example Belg, still holding from 2.34
but 4 divs received in the meantime. Think I prefer some more
action instead, this stock used to be the biggest in NZ but
no comments on it recently compared to others. With the dollar
down over the last week, sp should be rising if prior comments
are anything to go by. Looking at a long term chart this thing
could slowly grind down for some time yet - perhaps time to leave.
George

[Snoopy]

TELs restructing / renewal / transformation program moves into a new phase that should see some growth and there'll be some build up in SP as we close in on the next divi. And the delay in the split process will save some cash in the short term. I'd bail as we get close to the next divi - which will probably be when I'll be coming back in. Next year is make or break for TEL - either the story comes true or TEL is just another rather boring yield play on the NZX.

This thread was originally title "TEL - What will happen?"

I don't think this question, first posed after Telecom got unbundled and subsequently MD TG lost her job, has been answered. How will the unbundling bed in? Will Telecom get to participate in the government's 'fibre to the cabinet' roll out? Was the XT mobile network a step too fast into unproven technology, and what long term damage will Telcom suffer as a result of recent network failures? More negative talk has been around the potential outsourcing of some Gen-i jobs overseas. It all looks pretty bleak which is why TEL has emerged again on top of my investment prospect list.

At $2.31, and with a 6c (unimputed) dividend on the way, the Telecom share price is flirting near multi year lows. The unimputed dividend yield of 10% is attractive now, and when the write offs stop imputation credits will return. That means the 'net after tax yield' is unlikely to go lower, even if normalised earnings decline by 30% from here. IMO we are looking at a two year worst case scenario of a boring 10% plus yield and a flat share price. More optimisically I can see the share price climbing back to $3 within two years as Telecom trims more costs by closing down 'CDMA' and outsourcing some those highly paid Gen-i people's work to India.

To me this looks like panning out as a 'heads you win' , 'tails you win' story for the investor buying in a today's prices. That is why I bought a few more TEL last Friday at $2.31.

SNOOPY

discl: hold TEL

[bung5]

This thread was originally title "TEL - What will happen?"


More optimisically I can see the share price climbing back to $3 within two years as Telecom trims more costs by closing down 'CDMA' and outsourcing some those highly paid Gen-i people's work to India.

SNOOPY

discl: hold TEL

The only outsourcing that is in planning is their own I.T support contract that is currently with EDS.
Largest IT outsourcing company won't even do their own I.T

[troyvdh]

....woof ....wooof......gnarl..woof.....gnarl....woof..wof. ..

[p2r]

In the Dominion today there was a map of NZ all the districts maybe 15 in all with their plan for fibre in the next 10 years. Mostly lines companies with over or underground networks proposed with the Nat Govts plan.
Telecom will have to change with a big c.

[Bobcat.]

My limited grasp of stock trading has me buying into Telecom, for the following reasons:
1. I suspect the MacQuarie group is wanting more than what they've picked up already over the past few weeks;
2. There is a technical support level at around 227;
3. The bad news of XT failure has been digested and the goodwill payment priced in;
4. Project-related CAPEX is decreasing;
5. Retained earnings are less likely to bring downward pressure on the divi;
6. Paul Reynold's influence on Telecom is way better than that of his predecessor and that looks to have finally filtered down to middle management;
7. Market dominance in fibre infrastructure (govt regulated but still Chorus controlled - cash cow revenue stream).

Downside?
- Further network instability and loss of service?
- Govt bias against Telecom NZ growth and profit (less so with National, and with PR at the helm)?
- TCL, Vodafone & 2degrees eating further into TNZ's market share (not so much in 3G)?
- any more?
any more?

Phaedrus - would you mind providing a graph with OBV, RSI and other key indicators? Thnx.

[ratkin]

My biggest worry with telecom.............

Rival company Telstra are experiencing an accelerating decline in the number of calls made from landlines.

1) More and more people are ditching the landline and going totally mobile (often with rivasl networks

2) Thoose that are keeping landlines are keeping them to take recieved calls , rather than making them , so are only paying telecom the line rental

3) Long didtance calls are being consigned to history due to skype etc. Those that are made are now so cheap as to make telecom hardly any money.

I remember a long phone call to my mother when i first came to this country (here to UK) Cost me almostt 200 dollars. Now it a few dollars for unlimited chat time.

On the plus side telecom making more and more money from other stuff, but the accelerating loss of landlines will take a while to replace the revenue

[peat]

RSI on daily has come back up from being oversold and crossed through the 30% line. Sometimes this is considered a buy signal but there has been no divergence. The ichimoku cloud is above at around the 2.40/50 level so price may currently be drawn up to there but in the future the cloud signals more bearishness. Really you need a clean break of 2.50 for any immediate sign of bullishness. My pick is if it went there it would be rejected again.
On the weekly the RSI isnt oversold and still heading lower , no divergence there either.
Just a utility again huh with yield the only thing that holds it up.

[Phaedrus]

Phaedrus - would you mind providing a graph with OBV, RSI and other key indicators? Thnx.TEL is still looking weak. Note the inexorable OBV downtrend and the unbroken downward trendline. Right now, this is a stock going nowhere - slowly.
The RSI gave excellent Sell signals (red arrows), but is triggering a series of useless Buy signals (green arrows) all the way down. This is exactly what you expect with a downtrending stock.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/TEL212.gif

[sharer]

RSI on daily has come back up from being oversold and crossed through the 30% line. Sometimes this is considered a buy signal but there has been no divergence. The ichimoku cloud is above at around the 2.40/50 level so price may currently be drawn up to there but in the future the cloud signals more bearishness. Really you need a clean break of 2.50 for any immediate sign of bullishness. My pick is if it went there it would be rejected again.
On the weekly the RSI isnt oversold and still heading lower , no divergence there either.
Just a utility again huh with yield the only thing that holds it up.

Thanks Peat for the comments, and the Ichimoku example. Makes sense.

Other worrying comment in the Results about seriously falling "underlying" revenue, the delay (or loss?) in big client transfers to XT (who can afford the risk of failure?) - i'd expect this factor to be a longish term & serious negative, (until something convincing emerges about fixing or rebuilding parts of XT), continuing uncertainty about the fibre network (govt regulation, multiple competition, duplication & displacement of TEL's own plans). Remember expensive peccadillos like the TV mininetworks in Wgtn Akld etc?, or the Australian adventures, which nobody bothers much to mention lately despite massive amounts of money vanishing across the ditch? Maybe the Chorus utility & SthrnCrssCable could soon be the only bits of the business still worth having in the core portfolio? The overhyped XT thing still looms as a dangerous disaster just waiting to fall on us. And now we have talk about reducing/outsourcing & generally offering to bugger up Gen-i, another candidate for "best part of business". Actively driving away overseas so many of our best technically qualified people, when all the "experts" claim we should be doing the opposite, just seems like bloody minded stupidity.
TEL gets my vote for the most exasperating thing on the NZX. It's too big for those folk to manage, they're not clever enough. Perhaps TEL needs to be broken into several enterprises, of a size & complexity the grossly overpaid managers might be able to cope with.
If there was any prospect of such devolutions, it could be a good buy???

[peat]

I'd suggest that the only reason many are holding TEL; apart from the 10% plus yield!; is for the day when TEL will be split into pieces ...
I'd guess a lot of portfolios (to their detriment) are almost obliged to have it given it was the No 1 company by cap - now No 2 of course but still a large representation in the index.
It must suck to be a passive portfolio manager and have to hold heaps of these.
How long can the div be sustained ?? - isnt that the real question here because without that price will fall out of bed. Guess I should check the times covered figure.

[macduffy]

Yes, there's not a lot of cover there at present.

6 mths to Dec

EPS 13c DPS 12c

3 mths to Dec

EPS 4c DPS 6c

[shasta]

Yes, there's not a lot of cover there at present.

6 mths to Dec

EPS 13c DPS 12c

3 mths to Dec

EPS 4c DPS 6c

Are the dividends fully imputed yet?

Seems "No" for FY10

http://www.stocknessmonster.com/news-item?S=TEL&E=ASX&N=582368

[Bobcat.]

Similar chart pattern to mid Dec. Three days of higher highs off a support platform (in this week's case, $2.28). Now that their result is published, I would not be surprised to see the sp climb right through next week. Having said that, I'm not stupid -- if it drops below 225, I'm out. Have others noticed that the DOW does not seem to affect this stock like it used to?

[Snoopy]

Yes, there's not a lot of cover there at present.

6 mths to Dec

EPS 13c DPS 12c

3 mths to Dec

EPS 4c DPS 6c


The ability to pay cash dividends depends on cashflow Macduffy. Revenues at TEL are declining but costs are declining faster. So cashflow is actually improving. Outweighing both of these factors is the increased depreciation and amortization compared to the previous reporting period. But depreciation and amortization are non cash costs so do not impact on TEL's ability to pay a dividend. That means there is no immediate threat to maintaining the current level of TEL dividend.

SNOOPY

[Snoopy]

Are the dividends fully imputed yet?

Seems "No" for FY10

http://www.stocknessmonster.com/news-item?S=TEL&E=ASX&N=582368


For Telecom FY2010 ends on 30th June which is 4.5 months away. That final dividend for FY2010, without imputation credits, will be paid on or about 18th September. It is possible that imputation credits will be restored fully or partially after that date. The sharemarket often reacts around six months before the actual event. That means you may see the potential restoration of imputation credits begin to be reflected in the TEL share price from mid-March. It is now mid February. So there perhaps we should not keep our eye off the Telecom ball for long.

SNOOPY

[macduffy]

That means there is no immediate threat to maintaining the current level of TEL dividend.


I agree with that.

The fact remains that EPS "cover" for DPS is rather slim.

[Snoopy]

The fact remains that EPS "cover" for DPS is rather slim.


Right. And it is at that this point in a discussion like this that Winner usually jumps in and reminds us that although depreciation and amortization are not a cash items now, this money was real Telecom cash once.

Writing off via depreciation in particular is an essential part of running a telecommunications business. This isn't a long term problem unless the capital expenditure required to set up the new technology (like the XT mobile network) is greater that the depreciation expense of writing off the old technology it replaces. Because capital expenditure is by its very nature 'lumpy' thre will be certain years when capital expenditure wildly exceeds annual depreciation. This isn't a problem as long as the balance is redressed by capital expenditure undershooting depreciation in the ensuing years.

Since Paul Reynolds arrived TEL capital expenditure has increased substantially under a kind of 'build it and the customers will come' marketing strategy. More correctly I suspect the motivation for much of this expenditure has been along the lines:

"If we don't build it, then customers will go."

This I believe is the greatest risk for investors in Telecom. If Telecom can't get the investment returns over the life cycle of their new fibre to the box and new mobile networks, then the company capital will eventually be eroded away. Some 'capital erosion' may be acceptable, because new technology seems to be less capital intensive than the old it replaces. For a long time, line fees and old style toll calls carried such high profit margins that the new technologies could be effectively subsidised by the old technologies producing a more than satisfactory operating result. But this situation should not be taken as a 'given' going out into the future.

For investors today, a PE of around 10 implies almost nil growth going out into the future. Thus while Telecom carries a high 'technology risk', the 'investment risk' for those puttting their money into Telecom today is IMO relatively low. And that is why I have been buying.

SNOOPY

[duncan macgregor]

[QUOTE=Snoopy;140606]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.[/QUOTE This is a perfect example of what happens when you ignore market sentiment. Fundamental Analysis is as use full as tits on a bull Snoopy as I keep telling you. Macdunk

[Dr_Who]

Right.
Since Paul Reynolds arrived TEL capital expenditure has increased substantially under a kind of 'build it and the customers will come' marketing strategy. More correctly I suspect the motivation for much of this expenditure has been along the lines:

"If we don't build it, then customers will go."



I tend to agree with you.

TEL has always been reactive and not proactive to the changes in the market place. It is like a Titanic captained by a uninspiring seaman. Tech have moved on and TEL is playing catchup game, cos it can, due to its market position.

Just look at overseas telco tech and you will see that future overseas calls will be made using high speed broadband at little to no costs. You dont need landlines in the future. On the mobile side TEL is always trying so hard to catch up to Vodafone and fails. Competition will come and TEL will be history. I really dont see any value in TEL.

http://www.nbr.co.nz/article/telecom-gets-iphone-118463

[Enumerate]

In the TG days, Telecom was a marketing company. Even worse, a marketing company based in Wellington!

PR has done two important things ... increased the engineering investment and is moving the marketing function to Auckland. Either of these initiatives would stop the rot - together - there are now intriguing prospects for growth. The main stumbling block is the regulatory framework.

On the engineering issue of broadband:

- broadband is NOT a fibre vs copper vs wireless issue. Evolution of ADSL and SHDSL services, over copper, will meet 99.95% of the "last mile" requirements for broadband services.

- the key performance issues, for broadband, are not phyical or link layer issues. The primary problem is network layer "peering" and the associated subissue of ISP over-subscription of upstream Internet bandwidth. For example, to get to CityLink servicers, in Wellington from a Telstra node, in Wellington, sees the traffic routed via Colorado. No amount of "last mile" link bandwidth is going to improve performance when the Telco's do no peer according to the spirit of the Internet.

- Multicasting and security should be the modern focus of broadband services - not "last mile" bit rate.

- the ECB policy analysts, in the Ministry of Economic Development, have no clue (at all) on what the key issues are. That is why the regulatory framework for telecommunications, in New Zealand is a complete and utter dogs breakfast. Telecom are being "punished" for all the wrong reasons - and where they are actually screwing the scrum, this is being ignored. (Hint: compare the depreciation schedules of Telecom and Vector for phyical layer infrastructure).

While the boffins at the Ministry of Economic Disablement and the tactical pricing regulators at the Ministry of Commissars are, as they are - putting capital into Telecom is an insane investment strategy. The fact that Telecom are investing is the triumph of hope over experience.

(BTW the Ministry of Economic Development Radio Spectrum unit - is actually an excellent manager and resolver of issues in the spectrum. It is a pity these people did not have a broader policy responsibility).

[duncan macgregor]

the only point to consider when investing money is market trend. I dont give a damn about day to day running should they do this or that. The people that ignore market sentiment will always lose their hard earned savings. TEL SP has been in a long term downtrend for years I was ridiculed when I stated it would hit $4 before it hit $5. I was later ridiculed for saying it would hit $3 before it hit $4. Now that the SP has hit $2-30 i can safely say it will hit $2 before it hits $3. Companies can turn things around and when they do the SP will show buy signals this company is still downtrending so why worry?. Macdunk

[troyvdh]

cheers mac...Mr Reynolds has yet to understood that "hate" that most folk have for telecom...breed over many many years...folk should not forget that gatting ..whilst telling NZ that unbundling would not work blah blah...she was telling the powers at be in wellington that should unbundling be endorsed...TEL would suffer a huge SP fall....as would lots of funds....how shameful.....

...none the less my daughter won her stage in todays coast to coast.....yeah haaaaaa...

[COLIN]

the only point to consider when investing money is market trend. I dont give a damn about day to day running should they do this or that. The people that ignore market sentiment will always lose their hard earned savings. TEL SP has been in a long term downtrend for years I was ridiculed when I stated it would hit $4 before it hit $5. I was later ridiculed for saying it would hit $3 before it hit $4. Now that the SP has hit $2-30 i can safely say it will hit $2 before it hits $3. Companies can turn things around and when they do the SP will show buy signals this company is still downtrending so why worry?. Macdunk

Fellow Investors: I counsel you to listen to what Duncan is saying. I have been an investor for many years - nay, decades - and have used all sorts of strategies. Overall I have achieved a reasonable measure of success, but in recent times I have come to realise some brutal truths, e.g. it is absolutely wealth-depleting to hold onto, or average down, shares that are on a pronounced downwards - or even on a "corrugated" sideways - trend, no matter how "wonderful" that share might appear to be, on a fundamental analysis. I am totally convinced that it is futile to ignore the trend - you can protest until you are blue in the face that the market "must" recognise the "value" in this or that company but, until it does, you are going to lose money, and that is a given. Forget about the adage that funds managers used to spout; "It is time in the market, not timing, that matters" (notice how little mention of that there has been over the last couple of years of major volatility!).

My over-riding maxim now is: BUY INTO STRENGTH, SELL INTO WEAKNESS. And I am greatly indebted to Phaedrus for his willing, patient and generous tutelage with his excellent charts, often in the face of outright hostility and ridicule which some seem determined to heap upon him. I am sure he would never claim infallibility but so often I have looked back at his various interpretations of the charts pertaining to particular stocks, or market indexes, and realised how right he was.

And as for Telecom: It must be two or three years ago now that I posted my advice to the effect that any savvy investor would be hard pushed indeed to justify a decision to continue to hold this stock, or buy into it. Duncan, you are spot on.

[COLIN]

My daughter won her stage in todays coast to coast.....yeah haaaaaa...

Troy: Congratulations on producing a winner. I am in total awe of the "intestinal fortitude" that these competitors display. I was in Sumner today, and marvelled at the thought that it was only 6 o'clock this morning when the one-dayers were standing on the West Coast beach. Well done.

[Snoopy]

PR has done two important things ... increased the engineering investment and is moving the marketing function to Auckland. Either of these initiatives would stop the rot - together - there are now intriguing prospects for growth. The main stumbling block is the regulatory framework.

Telecom are being "punished" for all the wrong reasons - and where they are actually screwing the scrum, this is being ignored. (Hint: compare the depreciation schedules of Telecom and Vector for physical layer infrastructure).


Telecom depreciates the "Customer Local Loop" over 3-50 years, "Junctions & Trunk transmission systems" over 10-50 years, and "Switching Equipment" over 3-15 years (p70, 2009 Annual Report). This is exactly what they did ten years ago. So I am curious to find out more about how this relates to Telecom profiteering Enumerate.

SNOOPY

[Snoopy]

the only point to consider when investing money is market trend. I dont give a damn about day to day running should they do this or that. The people that ignore market sentiment will always lose their hard earned savings. TEL SP has been in a long term downtrend for years I was ridiculed when I stated it would hit $4 before it hit $5. I was later ridiculed for saying it would hit $3 before it hit $4. Now that the SP has hit $2-30 i can safely say it will hit $2 before it hits $3.


FIM (for Former Investor Macdunk) in 2008 you said that Telecom would hit $4 before it hit $5 and you were wrong. You have also conveniently forgotten (again) about the subsequent capital restructuring that has made all of your share price comparisons distorted.

As I said in September 2008

"There has been a capital restructuring in the form of a share cancellation since you made your prediction. For every nine shares we shareholders owned back then we now have eight shares plus $4.88. So to get to $3 each of the shares we have left must drop an additional $4.88/8 = 61c. That means the TEL share price would have to decline to $3.00-0.61= $2.39 for your prediction to come true. And I'm not even counting dividends!"

A TEL share price of $2.30 today is equivalent to $2.91 back when you were making your predictions. So for your new prediction of $2 to come true, that means the share price must decline to $1.39 in today's terms. Alternatively to return to your much touted $3 the share price would have to rise to $3 -$0.61= $2.39. Do you still say the share price will safely hit $1.39 before it hits $2.39?

Of course you also have to factor in the 36c per share of cumulative dividends since that time to get a true comparison verses the NZX50. Don't get me wrong FIM, the investment performance of Telecom over the last 18 months has not been good. But it is nowhere near as bad as the figures you paint.



Companies can turn things around and when they do the SP will show buy signals this company is still downtrending so why worry?


Because the low risk gains are the early gains and a turnaround in operational performance can see a share price rise very fast. That is why you need to pay attention to TEL now.

SNOOPY

[macduffy]

My over-riding maxim now is: BUY INTO STRENGTH, SELL INTO WEAKNESS

I totally agree with COLIN's investment philosophy.

Just wish for two things -

- that I'd seen the light much (decades?) earlier

- that I had the discipline to always follow it without making excuses for certain stocks!

So no, not the time to buy TEL, IMO.

;)

[Enumerate]

This is exactly what they did ten years ago. So I am curious to find out more about how this relates to Telecom profiteering Enumerate.


I didn't say they were profiteering.

The "game" started over 20 years ago!

For the first 20 years, Telecom could "dial up" any profit level they liked by selecting the appropriate depreciation strategy. In the early days they were faced with competition on toll rates and "kiwi share" style regulation on local calling charges - hence the asset rich ROCs bought toll capacity from a relatively assetless toll provider (who could undercut any domestic toll bypass service - who had to buy circuits (at "retail") from the asset heavy ROCs.

These days the commercial threats are different - as are the changing patterns of demand. There is significant regulatory oversight into the charging of the various "wholesale" rates (local loop unbundeling, etc.). However, the structural games continue.

That is why I suggest a comparison of the Vector fibre asset depreciation schedules with the Telecom ones (if you can get a transparent view on this).

On the subject of "Telecom bashing": it is completely absurd for New Zealanders to consider themselves oppressed/exploited by Telecom commercial practice. If they want an object lession in commercial oppression - look across the ditch at Telstra! If they want an object lesson in commercial exploitation - look at Vodafone! TEL is a tiny minnow of a company compared with these two behemoths. TEL has no where near the market or provisioning power of these two - yet our regulators seem to be keen on levelling the only part of the playing field that TEL has any sort of advantage - without addressing the procurement or transfer pricing advantages of the large global competitors.

On the subject of the continued TEL downtrend: this simply reflects the continued bad sentiment associated with the regulatory environment - ranging from periods of pessimism to intervals of extreme pessimism. The TEL yield is astounding, for a company of it's type/size. I would suggest that a strategy of buying TEL ords along with a put option would capture the income and cover any further downside.

[duncan macgregor]

What most investors get wrong is this I must be right attitude, this share has bottomed, and I had better get more of the same, otherwise I might miss the uptrend.
Uptrends and downtrends can last for years giving out buy or sell signals as they do so.
Tel have helved the SP over and over with the fundies still trying to work out why..
Who cares why?, I certainly dont. The market will tell me if its a buy or a sell so why waste my time like so many others working it all out. If the company turns it around I miss three months uptrend, if it Dous not then I miss out on years upon years of downtrend. Macdunk

[Dr_Who]

I cant watch live streaming 33rd America's Cup race yesterday cos our internet speed is complete crap!!!!! Thanks Telecom. Gives me a reason not to buy any TEL shares. Our internet is an embarrassment, abit like cavemen discovering the wheel.

[Zaphod]

I cant watch live streaming 33rd America's Cup race yesterday cos our internet speed is complete crap!!!!! Thanks Telecom. Gives me a reason not to buy any TEL shares. Our internet is an embarrassment, abit like cavemen discovering the wheel.

Overall, New Zealand ranks in the middle of most OECD Broadband surveys, including ones for speed, pricing and coverage. Obviously there will always be some outliers in the mix, and unfortunately you are obviously one of those.

The country to watch is South Korea, whose broadband penetration, pricing and connectivity outrank (by a huge margin) every other country in the OECD.

[Bobcat.]

If you're having problems with internet connection speeds, go to www.speedtest.net to check latency, ping and upload/download speeds to & from your computer. The test will also compare your ISP performance with an industry avergae.

If you've purchased broadband from Telecom on ADSL, expect download speed to be somewhere between 3 and 6, on ADSL2 betw 5 and 8. If you're not getting these, ring 123 and ask Telecom Faults for a line test.

[Snoopy]

I didn't say they were profiteering.

The "game" started over 20 years ago!

For the first 20 years, Telecom could "dial up" any profit level they liked by selecting the appropriate depreciation strategy. In the early days they were faced with competition on toll rates and "kiwi share" style regulation on local calling charges - hence the asset rich ROCs bought toll capacity from a relatively assetless toll provider (who could undercut any domestic toll bypass service - who had to buy circuits (at "retail") from the asset heavy ROCs.

These days the commercial threats are different - as are the changing patterns of demand. There is significant regulatory oversight into the charging of the various "wholesale" rates (local loop unbundeling, etc.). However, the structural games continue.

That is why I suggest a comparison of the Vector fibre asset depreciation schedules with the Telecom ones (if you can get a transparent view on this).


OK I checked out the accounting policies as listed in the Vector 2009 annual report. Telecommunications equipment is being depreciated over 3 to 40 years. 3 years I imagine relates to heavy cycling switching equipment, whereas 40 years is more likely to relate to fibre cable (since I don't think Vector owns any 'copper wire').

As I have previously stated. Telecom depreciates the "Customer Local Loop" over 3-50 years, "Junctions & Trunk transmission systems" over 10-50 years, and "Switching Equipment" over 3-15 years (p70, 2009 Annual Report). I would guess that the longer depreciation period (50yrs TEL vs 40yrs VCT) might be because Telecom's copper wire is more physically durable than fibre (?), and that the latest ADSL2 can work over short distances on copper which means those old wires should not be consigned to the dustbin just yet.

In summary, I can't find *clear* evidence there is any difference between the depreciation schedules of TEL and VCT for the same equipment. However, it is possible that Telecom are depreciating some lines over 50 years and Vector are depreciating the same thing over 40 years. If, and it is a big if, the depreciation rates are different then there is an argument that Telecom are overstating their profits or -looking at it the other way- Vector are understating their own telecommunications profit. The problem then is this.

If either Telecom or Vector are mistating their profits this will catch up with them in the end. For example the Telecom 025 mobile network required multi-million dollar write offs when it was closed down as it became obsolete in both technological and marketing terms. In this instance, with the benefit of hindsight, Telecom were overstating their 025 network profits and it caught up with them. So I don't really understand your 'market manipulation argument' regarding depreciation Enumerate. Can you further explain?

SNOOPY

[Snoopy]

For the first 20 years, Telecom could "dial up" any profit level they liked by selecting the appropriate depreciation strategy. In the early days they were faced with competition on toll rates and "kiwi share" style regulation on local calling charges - hence the asset rich ROCs bought toll capacity from a relatively assetless toll provider (who could undercut any domestic toll bypass service - who had to buy circuits (at "retail") from the asset heavy ROCs.


Can you explain what an 'ROC' is please. I am not familiar with that abbreviation.

TIA

SNOOPY

[ratkin]

Does anyone have a long term chart of telecom which takes into accound dividends and other capital returns ?

[Enumerate]

Can you explain what an 'ROC' is please.


Regional Operating Company

[Enumerate]

In summary, I can't find *clear* evidence there is any difference between the depreciation schedules of TEL and VCT for the same equipment.


With respect, the detail of your investigation does not show there isn't a difference between TEL and VCT, either.

To address the point, by taking a different tack:

Consider how the regulator actually arrives at a determination of access pricing under the regulations:

http://www.med.govt.nz/templates/MultipageDocumentPage____4576.aspx

Effectively, it is up to the company to present the baseline cost data - the issue of structure and depreciation was not addressed under the first attempt at a regulatory regime.

Recent history (and the source of discomfort for the regulator) is the high level of profitability that has been recorded. As you pointed out - this could simply be ascribed to an "under claiming" of depreciation (supported a business culture of under investment) as you demonstrated with your Telecom Mobile depreciation observation:

http://www.med.govt.nz/templates/MultipageDocumentPage____4587.aspx

The regulator took the step of enforcing a structural separation of Telecom operating units under the terms of a formal separation agreement.

Today, we have the IOG monitored separation of the Telecom operating units.

http://www.iog.org.nz/home

We also now see a completely different behavior from Telecom. Recently, a massive increase in the level of investment and an associated slump in the level of profit.

Could this be an "engineered" response - increasing the rate of depreciation in areas where regulated access pricing applies?

The following paper makes the intriguing point that due to the large sunk costs of the long lived Telecom assets - their asset investment strategy may actually be more expensive than an efficient technology decision made by a competitor:

http://www.comcom.govt.nz/IndustryRegulation/Telecommunications/TelecommunicationsServiceObligations/ContentFiles/Documents/NERAs%20report%20290306.pdf

Exactly the same "games" are being played, in Australia, with Telstra. The long share price downtrend, based on negative sentiment, is a regional factor (TEL have suffered worse than TLS). In my view, Telecom is being unfairly tarnished with the Telstra brush - from an investor perspective. Also, Telecom is being unfairly profiled as a monopolist exploiter of its vast copper/exchange network, by the MED policy analysts.

My view is that once sentiment improves in Australia (TLS turns around it's recent "legacy" from Sol Trujillo) we will have the conditions for a stop in the slide of the TEL shareprice. The main worry remains the cack handed policymaking, in New Zealand. If TEL makes good money by implementing inspired service, management and investment choices - it risks the ire of the Ministry of Economic Disinvestment in policies that punish this success.

The MED need to understand the nature of broadband performance. Their efforts, to date, have been woeful. There are good and bad reasons why certain elements of broadband are slower in NZ. (We are further away from almost everywhere ... it costs more and performs less when you implement connectivity solutions. We do not have the density of scale of use seen the Europe, the US or even parts of Asia).

The peering issue I mentioned is a significant performance drag - but it is not primarily a Telecom problem. Why regulate Telecom to solve it?

MED starts off with a false set of assumptions and engineers a naive policy response. This policy response adds significant cost to TEL without offering a single benefit. What is the progressive investor response to this idiocy ... investing elsewhere. (This collapse in the TEL shareprice should be telling the socialists at the MED that their policy (of increasing investment in broadband through direct regulation of access to the TEL network) might not actually be working.

Meanwhile, two global multinationals (Telstra and Voda) see a potential competitor in their core markets hamstrung. Real smart ... better standards of living for all kiwis through macro-economics :(

[Bobcat.]

Have you noticed the beginnings of an upward trend in the sp? Higher highs for four days now. I'm picking 2.50 by month-end. Being cum-div, and with a lot of the downward pressure now relieved it may rise further...but 2.50 is my target sell for a 9% profit.

I agree with E. that Telstra has dragged this stock down but TLS looks to have support @ AU3.15 which is holding. If that stock's sp goes north from there, that's another reason why TEL's sp could rise. The TA is looking O.K. for a short-term play. If it breaks through 2.50 then it may even confirm a trend reversal longer-term.

Discl: I bought into TEL last week.

[Snoopy]

Have you noticed the beginnings of an upward trend in the sp? Higher highs for four days now.


I have noticed that TEL is up today while the rest of the market is down. I guess the conspiricists will be wondering what secret information is out there? Find out for yourself tomorrow. I hear that Paul Reynolds is giving the 10am feature interview on National Radio tomorrow morning.

SNOOPY

[Zaphod]

Gen-i ....

Telstra got rid of its equivilent called Kaz to Fujitsu. Sale price was $A200 mill. TEL bought Gen-i and Compterland at about the same time that TLS bought Kaz.

Gen-i would seem to be a TG hangover and pretty much a "dot com" boom business model concept that IMNSHO was wrong then and still wrong now.

Yes, some parts of Gen-i benefit TEL's business but only a small part and the rest can't get any special deals as all transactions between Gen-i and other parts of TEL are supposed to be at arms length. (I'd suggest many may not be but that's speculation on my part.)

Rumours are rife that Gen-i may be flogged off relatively soon - maybe this year. I think this would be good for TEL and good for Gen-i.

So what's TEL worth with Gen-i flogged off? Certainly a bit less and what would they do with the dosh? Special div?

Or would TEL reinvest it? The later probably if TEL wants to play in the super fast broadband game.

Dot Com boom business model? Why do you think that? I can't see how providing turnkey IT solutions combing telecommunications and information technology relates to the internet .COM bubble.


Are you aware that further regional franchises of Gen-I are being bought up by the head office? Also, if I remember correctly Gen-I makes a relatively large contribution (in percentage terms) to Telecom's overall revenue stream.

At this stage however, I am not holding any TEL nor will I do so until is shows enough signs of recovery.

[Snoopy]

Does anyone have a long term chart of telecom which takes into account dividends and other capital returns ?

I don't have that. But I can give you the dividends received over the last 5 years. You have to add those onto the TEL chart to get an NZX50 comparable result. The dividends are paid quarterly in December, March, June and September of each year, with September being 'the big one' where any extra profits for the year are distributed.

FY2010 (so far): 6c x 0.7 = 4.2c

FY2009: (6c +6c +6c +6c) x 0.7= 16.8c

FY2008: (7c + 7c+ 7c +8c) = 29c

FY2007: (7c + 7c+ 7c +14.5c)(9/8) +61c = 100.9c

FY2006: (9.5c+14.5c+9.5c+12c)(9/8) = 51.2c

FY2005: (9.5c+9.5c+9.5c+20c)(9/8) = 54.6c

That takes us back to December 2004 and the 9.5c dividend which I have included as the first dividend from FY2005. I add that up to be an overall cash payment (including the 61cps capital return in October 2007) of $2.567 per share, for each share currently listed.

SNOOPY

[ratkin]

I don't have that. But I can give you the dividends received over the last 5 years. You have to add those onto the TEL chart to get an NZX50 comparable result. The dividends are paid quarterly in December, March, June and September of each year, with September being 'the big one' where any extra profits for the year are distributed.

FY2010 (so far): 6c x 0.7 = 4.2c

FY2009: (6c +6c +6c +6c) x 0.7= 16.8c

FY2008: (7c + 7c+ 7c +8c) = 29c

FY2007: (7c + 7c+ 7c +14.5c)(9/8) +61c = 100.9c

FY2006: (9.5c+14.5c+9.5c+12c)(9/8) = 51.2c

FY2005: (9.5c+9.5c+9.5c+20c)(9/8) = 54.6c

That takes us back to December 2004 and the 9.5c dividend which I have included as the first dividend from FY2005. I add that up to be an overall cash payment (including the 61cps capital return in October 2007) of $2.567 per share, for each share currently listed.

SNOOPY

Am i right in thinking the shareprice was around 6.00 in dec 2004?
so 6.00-2.57 = 3.43
3.43 Shareprice would be the break even point for anyone who paid 6.00 in dec 2004

Unless i have it totally wrong looks like shareholders would still be underwater . If that sharehoder sold today they would get say 2.30 per share 2.30 + 2.57 dividends = 4.87 so they lost 1.13 per share.

They would of lost about 18-20% of money invested? (my maths weak)

Not good , however considering the shareprice has performed very poorly it not a total disaster , also four years is quite a short time to judge a longterm investment. Still all to play for !!

I was impressed with your patience with restaurant brands , plenty were quick to use hindsight and critisise your investment , but eventually you were rewarded. Maybe the same will happen with telecom

[Enumerate]

I bought into TEL last week.


The mood in Australia still seems to be very dark towards TLS. The Australian socialists want to spend AUD$48billion on a "fibre to the home" National Broadband Network (NBN). Telstra wants to implement a FTTN (Fibre to the Node) physical layer network built on ADSL2+ link layer technologies (like Telecom).

Google have announced a pilot initiative to wire 50k homes with 1Gig fibre. This has everyone in a flap as to why the NBN cannot be rated at 1Gbps line speed.

NBN without TLS will be a white elephant. Very much like the NZ Government GSN ... only on a much larger scale. An ADSL2+ FTTN solution is a good choice.

Australia seems to have their very own version of David Cunliffe ... only many times more dangerous because of the political clout they control.

Even on this thread we have people equating access bandwidth with network performance!

Anyone planning to spend AUD$48billion on a new access network should demonstrate, at least, that they have an understanding of Metcalf's law. (If you have to look this up - you might also try and explain the significance of saying "aloha" to Bob ... ).

The good news, in terms of your investment timing, is that the TEL situation is no where near as irrational as in Australia. I reckon you have picked up bargain TEL shares from a paniced Aussie fund manager ...

[Snoopy]

Am I right in thinking the shareprice was around 6.00 in dec 2004?


Yes



so 6.00-2.57 = 3.43
3.43 Shareprice would be the break even point for anyone who paid 6.00 in dec 2004

Unless I have it totally wrong looks like shareholders would still be underwater. If that shareholder sold today they would get say 2.30 per share 2.30 + 2.57 dividends = 4.87 so they lost 1.13 per share.

They would of lost about 18-20% of money invested? (my maths weak)


The above arithmetic looks OK Ratkin. And your conclusion: that those who bought in at $6 and have continued to hold and reap the dividends are still down, is right.

Given that this investment game is not the exact science that some think it is, I would be tempted to leave it at that. But the pedant in me won't let me do that!

The bit you left out Ratkin, was that when the share price was $6 everyone held 9 shares for every 8 they hold now (thanks to the subsequent share cancellation and capital return). To adjust for that and using $2.57 for dividends received and $2.30 as the current share price (as you did) , we can calculate the 'loss per share' in today's terms as follows:

[(9/8)$6.00-($2.30+$2.57)]= $1.88

That represents a loss of $1.88/[(9/8)$6.00] = 28% on the original capital

Of course, those of us who have continued to buy TEL shares at below $6 -like me- have not suffered a percentage loss as great as that I have just calculated.



Not good , however considering the shareprice has performed very poorly it is not a total disaster , also four years is quite a short time to judge a longterm investment. Still all to play for !!

I was impressed with your patience with restaurant brands, plenty were quick to use hindsight and critisise your investment, but eventually you were rewarded. Maybe the same will happen with telecom


The unbundling of the local loop and the associated operational separation within Telecom are permanent regulatory changes to the telecommunications industry landscape. TEL investors must accept that money built into the share price pre-separation on the assumption that unbundling would not happen is now lost. This is not to say that investors should sell out of Telecom because of unbundling *now*. The share price already reflects that loss, which Paul Reynolds repeated on the radio this morning as worth around 30c per share.

IMO the unbundling loss has created the 'negative halo effect' impression that all of Telecom's future dealings with the government will also be bad for shareholders. This is certainly not inevitable. As Reynolds said this morning, even if Telecom do not get to participate in building the government's fibre to the home new network vision, they will still be allowed to use it (along with all other commercial competitors).

To answer your question more directly Ratkin, no I do not expect a recovery like RBD from its lows. But yes I do see a positive future for TEL from here, which is why I bought the most Telecom shares I have ever bought in one day (fancy that!) last week.

SNOOPY

[duncan macgregor]

Does anyone have a long term chart of telecom which takes into accound dividends and other capital returns ? Ratkin this is where the sp has drifted during the last five years in february at this time.
1, $6-50
2, $5-50.
3, $5-00.
4, $4-10.
5, $2-70.
6, $2-33.
I wont depress you by going further back but feel certain that if you stuck the origional investment under the matress you would be financially better off than playing with this dog.
Macdunk

[ratkin]

If you go back two more years or even better three , then the holder is in profit

[percy]

If you go back two more years or even better three , then the holder is in profit

just as well you saved $100 on the plasma tv.

[BRICKS]

just as well you saved $100 on the plasma tv.

TO buy a LCD or a Plasma TV just about to do it next time in NZ..

[percy]

TO buy a LCD or a Plasma TV just about to do it next time in NZ..

Bricks ring Rick Hellings at Scy.He will tell you.

[BRICKS]

Bricks ring Rick Hellings at Scy.He will tell you.

COULD go to the new store and give it a whirl someone let me know when it opens..

[sharer]

Commerce Commission places new Telecom VDSL services outside regulations

Thursday 18th February 2010
Telecom can market new, high-speed VDSL broadband services without reference to regulations that govern the fixed line broadband market, the regulator has ruled.
In a draft decision issued today in response to a request for clarification from Telecom, the Commerce Commission says that Telecom can choose whether to offer high-speed broadband using the new, faster VDSL technology under the regulations or as a purely commercial offering.
"Telecom may use VDSL to deliver bitstream services with higher quality specifications than the regulated service, and can offer these services commercially," Telecommunications Commissioner Ross Patterson said.
Telecom welcomed the draft decision, saying it was "heartened" by the statement, which provides "an appropriate level of guidance and flexibility for us to deliver existing regulated bitstream services, whilst setting a clear path for the introduction of new enhanced services that technologies such as VDSL2 enable.
”The commission is reserving the right to carry out a review "to determine whether the commercial service should be added to the regulated service".
"However, VDSL technology is in its infancy in New Zealand (and).the Commission's preferred approach is to observe the performance of commercial VDSL serices in the market and only undertake a formal review under the Telecommunications Act if competition concerns emerge," Patterson said.
Telecom sought the clarification on whether VDSL was covered by the unbundled bitstream access (UBA) standard terms determination, with general manager of industry & regulatory affairs John Wesley-Smith saying the company’s wholesale arm expects to launch “specific VDSL-2 based services” this year.
“If VDSL and future technologies are subsumed into the existing EUBA (enhanced UBA) and BUBA (basic UBA) services without Telecom Wholesale having the ability to charge a premium, this will destroy the value to Telecom Wholesale and the industry in any other VDSL-2 based services,” Wesley-Smith wrote in his October letter to the regulator.
Telecom was forced to split its retail, wholesale and network businesses by the previous Labour-led administration to speed up the process of local-loop unbundling and improve internet services. Since then Telecom has changed out its senior executives and John Key’s government has taken power.
Growth in unbundling the local loop slowed in the first half of last year after Telecom launched a wholesale loyalty offer that eventually fell foul of the regulator.The company’s stock was unchanged in trading today at $2.34. Submissions on the draft decision are open until the end of business on March 5.

[onlinesid]

"the Commerce Commission says that Telecom can choose whether to offer high-speed broadband using the new, faster VDSL technology under the regulations or as a purely commercial offering."

I don't understand much, but choice means good right? I bought some TEL at 2.4, I wish I had sold it a while ago before the XT disaster!

[ratkin]

Well it about 2.35 now , so selling would hardly be a disaster for you

[Snoopy]

With respect, the detail of your investigation does not show there isn't a difference between TEL and VCT, either.


A fair counterpoint to the 'relative depreciation' between TEL and VCT argument.

And if I may say so. Thanks for your very detailed Enumerate, which has taken me some time to digest!



To address the point, by taking a different tack:

Consider how the regulator actually arrives at a determination of access pricing under the regulations:

http://www.med.govt.nz/templates/MultipageDocumentPage____4576.aspx

Effectively, it is up to the company to present the baseline cost data - the issue of structure and depreciation was not addressed under the first attempt at a regulatory regime.

Recent history (and the source of discomfort for the regulator) is the high level of profitability that has been recorded. As you pointed out Snoopy - this could simply be ascribed to an "under claiming" of depreciation (supported a business culture of under investment) as you demonstrated with your Telecom Mobile depreciation observation:

http://www.med.govt.nz/templates/MultipageDocumentPage____4587.aspx

The regulator took the step of enforcing a structural separation of Telecom operating units under the terms of a formal separation agreement.


As I read it, The Ministry of Economic Development is basically saying that pricing should be based on an incremental cost basis. Then they add that charges may have to be revised upwards to cover the ongoing costs of the background infrastructure that is the platform for that incremental cost.

That is a very similar method to how power is priced today. The power producers says it costs $x to build a new power station which means they must charge $y for power to cover the costs of building that station. The fact that the power companies already own some hydro dams built with 1960s dollars that produce nearly free power doesn't come into it. It doesn't sound fair expressed like that. But with overall power consumption relentlessly increasing, this is how power pricing must be done.

By contrast, with the telecos the cost per call is going down with new infrastructure. So the old underlying infrastructure becomes almost a burden on the modern face of the company. Yet the telco must be assured it can cover the cost of historic infrastructure (not usually an issue with power companies selling power) to give an incentive to invest in future underlying telecommunications infrastructure going forwards. Given this situation, what is wrong with the Ministry of Economic Development's 'Incremental cost plus historic buffer approach'?

Yes it is up to each company to provide baseline cost data. But is this not self regulating if Vector and Telecom provide quite different costs? Competition means that the regulator can see which company is fibbing!



Today, we have the IOG monitored separation of the Telecom operating units.

http://www.iog.org.nz/home


Yes and it seems that IOG has quite complimentary things to say about Telecom and the separation process. I make the caveat here that during the first year of monitoring, Telecom was putting in place the procedural framework to allow unbundling to succed, rather than actually *doing* the unbundling.



We also now see a completely different behavior from Telecom. Recently, a massive increase in the level of investment and an associated slump in the level of profit.

Could this be an "engineered" response - increasing the rate of depreciation in areas where regulated access pricing applies?


The allegation is that Telecom is spending more tham necessary on capital equipment, thus incurring higher than normal depreciation charges which leads to lower than normal profits.

These lower than normal profits in turn stop the regulator from being so harsh on Telecom. In the long term this is good for Telecom isn't it? Is competitor Vector advantaged by such a strategy?



The following paper makes the intriguing point that due to the large sunk costs of the long lived Telecom assets - their asset investment strategy may actually be more expensive than an efficient technology decision made by a competitor:

http://www.comcom.govt.nz/IndustryRegulation/Telecommunications/TelecommunicationsServiceObligations/ContentFiles/Documents/NERAs%20report%20290306.pdf

Exactly the same "games" are being played, in Australia, with Telstra. The long share price downtrend, based on negative sentiment, is a regional factor (TEL have suffered worse than TLS). In my view, Telecom is being unfairly tarnished with the Telstra brush - from an investor perspective. Also, Telecom is being unfairly profiled as a monopolist exploiter of its vast copper/exchange network, by the MED policy analysts.


If the copper wires last longer than 50 years (the maximum of the current Telecom depreciation schedule) then Telecom is a monopolist exploiter, claiming an asset is falling in value faster than it really is. If the copper wires last less than 50 years, then Telecom is undercharging for access to the network and is being ripped off by their wholesale customers. I guess the Ministry is coming from the first point of view, and you Enumerate are coming from the second.

I think that most of those copper wires will still be there and working 50 years after thay are put in. But will they have been technologically surpassed by a parallel fibre network, which makes those copper wires *economically* worthless? It is a tough question to answer. But I guess you Enumerate are saying the answer is 'yes' (?)



The MED need to understand the nature of broadband performance. Their efforts, to date, have been woeful. There are good and bad reasons why certain elements of broadband are slower in NZ. (We are further away from almost everywhere ... it costs more and performs less when you implement connectivity solutions. We do not have the density of scale of use seen the Europe, the US or even parts of Asia).

The peering issue I mentioned is a significant performance drag - but it is not primarily a Telecom problem. Why regulate Telecom to solve it?


Because the Ministry has to be seen to be doing something. And they can't regulate what overseas competitors do in overseas markets?

SNOOPY

[Bobcat.]

Good ComCom decision on mobile termination access services, as far as Telecom's concerned. Technically if we get a close of 2.36 or higher, I would say that TEL is beginning a bullish run. Time to buy?

[Logen Ninefingers]

With the continued XT outages & the customer service 'f you' debacle, shouldn't the share price be in free fall? I don't get it: surely Telecoms brand is being irrepairably damaged. Can anyone tell me why the SP isn't/won't be taking a major hit?

[minimoke]

...

I see this as a flop for TVNZ (I'd prefer they spent the money on getting the audio on Freeview sorted first) and a flop for TEL.

TiVO Launch Flops In Australia.

Since that post we've seen about a $0.40 drop in TEL.

XT network isn't really working for them and as predicted neither is TiVO. TEL reckon that sales are modest and disappointing. Xmas sales targets weren't met.

But we see ongoing sales of Freeview boxes and MySkyHD increasing subscriptions. So despite TEL's massive retail footprint they aren't coming up with the goods. Expect more expenditure on marketing.

[macduffy]

With the continued XT outages & the customer service 'f you' debacle, shouldn't the share price be in free fall? I don't get it: surely Telecoms brand is being irrepairably damaged. Can anyone tell me why the SP isn't/won't be taking a major hit?

It could be argued that TEL's SP has been taking a major hit for some years now but it's very difficult to fatally damage a major company with the entrenched "copper wire" -type advantages of scale that TEL enjoys over its competitors.

But CEO Paul Reynolds will have to start to show that his previous reputation was well earned if the slide is to be halted, less alone reversed.

[peat]

I was going to say that if the bad news wasnt affecting the share price then contrarian thinking might suggest this could be a turning point , but I would have spoke too soon as when I check the price (down 3.4 % today). The irony is that "CEO Paul Reynolds this afternoon announced a range of significant measures aimed at restoring customers'' faith " would seem to be accelerating the downtrend as obviously these measure are sapping their future revenue.

[Dr_Who]

HEads should roll and the CEO should be the first to go.

[Oiler]

HEads should roll and the CEO should be the first to go.

Dont agree........ Reynolds seems to be doing all the right things. He may have been sold a bill of goods from the French. He is stuck in a tricky contractual situation.

I am an XT user and affected by the outages but I am not going into a tirade against Telecom.
I do not own Telecom shares.

[Xerof]

Anyone read "The Agony and the XT...c"?

Reynolds appears to writing the sequel..........

:p:p:eek:

[Dr_Who]

Dont agree........ Reynolds seems to be doing all the right things. He may have been sold a bill of goods from the French. He is stuck in a tricky contractual situation.

I am an XT user and affected by the outages but I am not going into a tirade against Telecom.
I do not own Telecom shares.

If you think he is making all the right moves, then why aint you holding TEL shares?

disc: Have not hold any TEL shares since the tech boom and dont intent to buy any in the future.

[POSSUM THE CAT]

No CEO should be on a performance contract with a very hefty penalty clause to counter the Bonus clause. At the moment in my opinion he owes share holders about $3 Million

[Balance]

The person who creates the mess should sort it out first - if he is capable.

Then, take action.

Reynolds did not create the mess - he inherited from Theresa Gattung & Rod Deane. Those two will go down in NZ's corporate history as the people who destroyed Telecom by making bad investment decisions.

[Major von Tempsky]

Actually, for those with the capacity for individual thought and initiative....

Contrarians and value investors I'm talking about, those who don't run with the pack, now is probably the right time to invest in Telecom.

Take a considered look - company that built XT is flying in dozens of experts from all round the world, pulling out all the stops to make XT fail-safe and excellent. Telstra-Clear is making no traction - 5 0r 6 mill profit two years in a row, tiny compared to TEL, the Nat Gov't is showing signs at last of letting Tel have a fair go on bidding for ultra=fast broadband, 2 commissioners to 1 voted in favour of Tel/Vodafones market solution to mobile phone call pricing, Tel's last report showed it was doing very well in picking up the majority of broadband connections and new mobile connections....

[duncan macgregor]

Actually, for those with the capacity for individual thought and initiative....

Contrarians and value investors I'm talking about, those who don't run with the pack, now is probably the right time to invest in Telecom.

Take a considered look - company that built XT is flying in dozens of experts from all round the world, pulling out all the stops to make XT fail-safe and excellent. Telstra-Clear is making no traction - 5 0r 6 mill profit two years in a row, tiny compared to TEL, the Nat Gov't is showing signs at last of letting Tel have a fair go on bidding for ultra=fast broadband, 2 commissioners to 1 voted in favour of Tel/Vodafones market solution to mobile phone call pricing, Tel's last report showed it was doing very well in picking up the majority of broadband connections and new mobile connections.... Major you seem to take a personal interest in a company rather than stand back and take an objective view as an investment prospect. Surely with the sp record of this company it is now a question of how low can it go before it becomes a bargain rather than this is the right or wrongs of the given situation. I really dont care one way or the other if they come good or if they go bad. The only question I ask is [is this a good investment for my dollar or not?].
I see a company in a prolonged downtrend pissing off its subscribers, with its incompenance and arrogance, then come up with the conclusion, that picking the bottom is as stupid as doubleing up on losing bets.
TEL if it turns the corner will give TA buy signals in good time so why buy a ticket on a sinking ship ?.
Macdunk

[flyingmariner]

Agree with the Maj. Whoever sold to me at 2.24 today, thanks. I know it is popular bashing TEL but really is the share that horrible. Punters just throwing them out at these prices.

[winner69]

There was an interesting piece from Casey research ( http://www.caseyresearch.com/displayCdd.php?id=345 ) which talked about the concept of entropy. Entropy is term from thermodynamics a concwpt that essentially says that every closed system will ultimately decay toward a state of maximum entroy.

I was interested in such concepts because I see so many 'nature related' things happen in economics and investing

The article talked about US dollar, Toyota and the likes of fannie Mae being in an entropic state

I couldn't help but think about Telecom in this context. It has had a dominant position but also got very fat. When you hear stories about the Director in charge of technology commuting between US and Auckland to do his job, another top guy from US named Hamburger who has his own personal chef (hopefully not on the Telecom payroll), former Alcatel chiefs on the telecom board (that makes you wonder eh) you have to wonder what is really going on. Put this together with the excesses that Reynolds takes out of the company maybe telecom is in entropic state .... slowly rotting away until it ultimately dies ... at least in its present state

You only need to look at a chart of its shareprice to see what I mean ... and probably it is only what it is today because it pays out good dividends ... but those dividends are paid out of profits earned from excessive charges for a 2nd rate service (at least by global standards). What will happen when the punters really pack a sad and revolt about what it costs to use a phone in NZ ,,,, and i don't want to mention nationalisation because that's an even worse option.

just some thoughts for the day

[Dr_Who]

You are onto it Winner. That is why I dont own TEL shares and probably never will until they have a leader with vision that is proactive. TEL is a big fat titanic that reacts to the changes of fast pace tech and just cant seem to catch up due to their position in NZ. A good example I made early was XT not offering deals for Iphone and the plans cost more than Vodafone. Iphone is the new evolution of this century and where is TEL???

[winner69]

You are onto it Winner. That is why I dont own TEL shares and probably never will until they have a leader with vision that is proactive. TEL is a big fat titanic that reacts to the changes of fast pace tech and just cant seem to catch up due to their position in NZ. A good example I made early was XT not offering deals for Iphone and the plans cost more than Vodafone. Iphone is the new evolution of this century and where is TEL???

Apparently one of the US based directors is 'well connected' with the necessary people to make iphone happen ..... did he 'fail' in this role .... should he go as well

Also you would think that world famous marketer Kevin Roberts would have been able to wangle something ....and talking of marketing isn't Telecom marketing successful ... they seduced hundreds of thousands to buy a dog ..... but what is Roberts role on the board anyway?

[Bobcat.]

former Alcatel chiefs on the telecom board (that makes you wonder eh) you have to wonder what is really going on.

Winner - Alcatel (French wireline company) bought into Lucent (American wireless/mobile company) three years ago when it looked like a good idea at the time. Now as we know, the French and Amercians have never really go to well. Even when the USA (before it had many 'united' states at all) were battling the Brits and turned to the French for support that was a marriage of convenience. The French reneged on a few things before sending the Americans the Statue of Liberty as a goodwill gesture.

Step forward in history a few hundred years to Alcatel-Lucent. The French (Alcatel) with a European way of doing business pissed off the Amercians (Lucent) for a) the take over, b) pretending it wasn't a takeover by hanging onto a few Lucent senior managers castrating them of power, and c) never really understanding mobile/wireless but assuming charge of it regardless. 'Mergers' of two companies with very different cultures has seldom worked well and so ALU was not alone in this. Their spat came to a head two years ago when the CEO Pat Russo and Chairman Serge Tchuruk stepped into the boardroom one day, pointed at each other saying "I can't work with that person", both expecting the board to oust the other. Instead, the board ousted them both! Soon after, they both announced their resignations.
http://blogs.wsj.com/deals/2008/07/29/mean-street-alcatel-lucent-does-it-mean-a-thing-if-the-ceo-swings/
And the trouble didn't end there. Since the 'merger', there have been a series of boardroom squabbles and upheavals in the new organisation.

Step forward in history to the way ALU operated in this country from 2007 to 2010. The development of Telecom's XT network (previously called project 'Sunrise' - UMTS/3G) has been ongoing for three years. After the takeover, in spite of the platitudes, Alcatel remained firmly in control of Lucent business through the chain of command down to (but not including) the programme level. At the programme level, Lucent people were managing projects, designing solutions and engineering the builds as they always had. Local management (indeed most ALU management globally) let legacy-Lucent people beaver away designing & deploying their mobile solutions without much interference so long as they contributed to the bottom line O.K and behaved themselves. You see most management knew wireline (physically fixed networks) but hadn't much clue about wireless (wi-fi, wi-max, 2G/3G, RAN, etc). Hence the problem: inadequate quality assurance, inadequate risk management and poor accountability on all Mobile programmes of work and product development.

Step forward to this month: Telecom has discovered that the Radio Network Contoller (RNC) housed in Christchurch has some serious design issues. It has failed in multiple ways several times, loosing traffic from cell-sites around NZ, mainly south of Taupo. The technology is faulty and its testing & implementation found wanting. The resulting impact on ALU's customer (TEL) and TEL's customers while not devastating, has been serious, and Paul Reynolds is quick to point out to the NZ public who it is that's to blame. You see, it's well documented that Scotty Reynolds was never really a big fan of ALU in the UK and has treated them with suspicion since arriving here. Now he must see that suspicion to be well founded.

The sorry news for ALU is that they have poured a lot of resource into TEL NZ @ not a huge margin, hoping for the NGT being deployed here to be a showcase for more lucrative markets in Europe and elsewhere. That hope must now be fading...time to go short on ALU on the DAX. But short on Tel?? Probably not - I'm still holding after buying into this stock last week with a stop loss at $2.23.

[Jaa]

Word on the IT street is that the XT network had serious issues from the beginning. It is built on bleeding edge technology and thus was always high risk.

Alcatel Lucent have admitted that they have no idea what is causing the Christchurch RNC to fail. All they have achieved in the last two months is to get faster at reconnecting the linked cell sites after it fails. The cause is likely software related and thus will be very hard to isolate, test and resolve. It it was simple they would have caught it by now. They are also probably very scared to even touch anything in Christchurch.

Thus in the short term they really only have one option left. To commission a 3rd RNC for Wellington (key corporate battleground) and a 4th for Dunedin (traditional stronghold for Telecom Mobile due to the network effects of $10 txt) to build in some redundancy and to mitigate any further disruptions. Hopefully they can replicate the Auckland setup not the Christchurch one!

Then I would take the network down during a Saturday night (one would think this would take hours but if it takes a day then so be it) and switch everything away from Christchurch and switch that RNC to active standby (this will allow them to test and isolate the cause properly).

These moves could be done without downtime no doubt but would require a longer leadtime due to the complex planning involved and thus take longer than Telecom have. Customers will understand a few hours downtime if they can see a serious effort is being made and an end is in sight. This kind of call requires serious management support to listen and back your engineers. Gattung would never have done it but Reynolds might.

As the dominant Teleco they have the data centres, fibre and people to do this. Alcatel's global repuation is also on the line as XT is their key reference site, hence combined they should be capable of sourcing, installing and setting up the RNCs in record setting time.

Until they resolve the issue and/or perform a similar operation to the above, more major outages are highly likely. Those buying shares now should stop to think not what the next outage will do but what affect the 6th might have. Risk is all to the downside.

As for Reynolds, I have been impressed so far. No excuses and straight talking makes a nice change.

[Bobcat.]

The heritage-Alcatel side of Alcatel-Lucent - that is the fixed network side - operates quite separately to the heritage-Lucent side of the business (see my other post earlier today). On the fixed network side (heritage-Alcatel) the 'Primary-Line-Voice and BBI" programme is delivering a VOIP-based replacement to the NEAX based switched network. VOIP trunking is implemented and TEL are beginning (with ALU partnering) to offer Broadband Internet services upon it (IPTV/triple play, subscription profiling, service management, self-provisioing, etc). That programme looks to be in good shape, technically at least (the jury is still out on the long-term customer uptake of those services).

To be fair, ALU's mobile programme and its Fixed Network Capability & PLV programmes are run like separate business units with different processes, people and technologies involved. ALU's problems (and TEL's) are almost entirely to do with the Sunrise/UMTS/XT mobile programme and its failings. The wireline business and its relationship within TEL is in much better shape...but don't expect scotty Reynolds to tell you that - since before arriving in NZ he's been dark on ALU.

[Jay]

Thnaks for the above BC, very enlightening.

Sounds like you know a lot of what's going on from the inside of close to it/ experience in this area??

[Bobcat.]

I came out of the local telco industry a year ago, mate, and haven't looked back. Paid well, but too much blame and shame, dirty politics, and dog-eat-dog for my liking. Life's too short as it is without wasting time and effort cleaning up someone else's s-h-i-t-e (inside both companies). I'd rather a day-job in front of a terminal trading stocks and forex, that's how bad it was.

Some good kiwis and a few less good foreign nationals inside ALU with skin in the game but with XT failing and the company taking a hit this month, it's not hard to think of better places to be.

BTW, TEL's sp holding nicely above $2.30. Looks like a higher low than yesterday, also cum-div. Not at all bearish. If it closes above 132 then perhaps even bullish! But once it goes ex-div, especially if XT keeps falling over...the bears could easily rule this one.

[winner69]

Another TEL fiasco so I thought sbout our departed friend Theresa

Googled Theresa to see ehat she is up to at the moment .... seems she is involved in helping out the SPCA .... no doubt saving dogs ..... some people just can't get away from dogs can they .... assuming TEL was / is a dog that is

Hope her philanthropic work is more successful

At least nobody has blamed her for the XT thing

[minimoke]

Just when the bulls thought things couldn't get worse, TEL now have problems with the 111 service.

[Brooker]

I am amused by the resilience the sp is showing relative to the problems they are having. I have been tempted, but I also believe there will be another reasonable drop once it goes ex div.

[Snoopy]

With the continued XT outages & the customer service 'f you' debacle, shouldn't the share price be in free fall? I don't get it: surely Telecoms brand is being irrepairably damaged. Can anyone tell me why the SP isn't/won't be taking a major hit?


Share prices tend to hold up well just prior to a dividend payment. TEL goes ex a 6c dividend today.

In addition the overall level of a share price contains some expectation of earnings built into it. So even though the XT outage was 'bad news', this was only confirming what the market suspected about Telecom's upcoming earnings. So the share price did not react. OTOH any good news, however unlikely that may seem at the moment should see the TEL share price move higher quickly because it would be so unexpected. So this is where Telecom sits today. The share price is unlikely to go much higher soon, but it is even less likely to go lower because it is already at rock bottom. So IMO, buying at these levels and plugging into that dividend stream while waiting for something good to happen makes a lot of investment sense.

SNOOPY

[ananda77]

Share prices tend to hold up well just prior to a dividend payment. TEL goes ex a 6c dividend today.

In addition the overall level of a share price contains some expectation of earnings built into it. So even though the XT outage was 'bad news', this was only confirming what the market suspected about Telecom's upcoming earnings. So the share price did not react. OTOH any good news, however unlikely that may seem at the moment should see the TEL share price move higher quickly because it would be so unexpected. So this is where Telecom sits today. The share price is unlikely to go much higher soon, but it is even less likely to go lower because it is already at rock bottom. So IMO, buying at these levels and plugging into that dividend stream while waiting for something good to happen makes a lot of investment sense.

SNOOPY

Hi Snoopy,

...do me a favor and say the same things aloud about Telstra to a Telstra 'long term' holder...

Kind Regards

[minimoke]

Share prices tend to hold up well just prior to a dividend payment. TEL goes ex a 6c dividend today.


SNOOPY
I'm a little surprised on just how resilient shareholders are. They've had the problems with the Chorus contractors and end user service delivery; call centre problems (like the "*uck off" text"), problems with Xt, Problems with 111, no traction with TiVO. In the meantime 2Degrees and Vodaphone are doing their bit to relieve them of those pesky complaining customers, christchurch city coucil is laying fibre faster than it can be made yet the SP still hangs in there.

[Anna Naum]

www.nzherald.co.nz/technology/news/article.cfm?c_id=5&objectid=10628577

[Dr_Who]

Oh dear, it gets worst for TEL.

Angry with Telecom? We'll pay break fee, says Vodafone
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10628823

[Deev8]

Oh dear, it gets worst for TEL.
Angry with Telecom? We'll pay break fee, says Vodafone
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10628823
Quite a smart move by Vodafone to increase its market share. Of course it won't make any noticable difference to Vodafone's bottom line, New Zealand is little more than a drop in the ocean in that respect.

[Silverlight]

From a customer point of view, in the last 4 months, have lost maybe 20 minutes coverage when XT was out on one occasion, but for that I am getting 33% off my bill for the next 3 months. I am ah happy customer tbh.

For most there is no reason to switch, and XT still has far better coverage nationwide than vodafone. Just one view against the sea of negativity.

[Brooker]

Share prices tend to hold up well just prior to a dividend payment. TEL goes ex a 6c dividend today.

In addition the overall level of a share price contains some expectation of earnings built into it. So even though the XT outage was 'bad news', this was only confirming what the market suspected about Telecom's upcoming earnings. So the share price did not react. OTOH any good news, however unlikely that may seem at the moment should see the TEL share price move higher quickly because it would be so unexpected. So this is where Telecom sits today. The share price is unlikely to go much higher soon, but it is even less likely to go lower because it is already at rock bottom. So IMO, buying at these levels and plugging into that dividend stream while waiting for something good to happen makes a lot of investment sense.

SNOOPY

Correct me if im wrong snoopy but TEL goes ex div today 1 March, hasn't held up and will probably drop again tomorrow...

[ratkin]

From a customer point of view, in the last 4 months, have lost maybe 20 minutes coverage when XT was out on one occasion, but for that I am getting 33% off my bill for the next 3 months. I am ah happy customer tbh.

For most there is no reason to switch, and XT still has far better coverage nationwide than vodafone. Just one view against the sea of negativity.

The media witchhunt against telecom has blown the situation up out of all proportion. Reality is most customers, like yourself will of suffered hardly any inconvienience , and are being compensated anyway.
TV one go out of their way to find someone who couldnt dial emergency services. All the fuss makes you wonder how people ever survived before the days of mobile phones

[Snoopy]

TEL *is* ex dividend today Brooker. It went ex-dividend on Friday. The 6% drop today in share price was a blow to long suffering TEL investors, even though only about half of that drop was 'real' (due to the share going ex-dividend). I think the drop today was partly related to the 'spin off' effect of investors in Telstra across the ditch facing issues as to who will end up owning the yet to be built fibre network in Australia and what it will mean if Telstra end up not being part of the build deal. The newspaper commentary I saw was that even in the worst case scenario, the existing Telstra network will remain a large cash cow for 10 years or more. Telecom faces similar issues here, although this is not news. But publicity around the issue does bring it into immediate investor consciousness again.

Still I am happy with my recent top up in at $2.31, given it was before the most recent XT outage. I will be keeping a close eye on Telecom now, looking for the right time to top up again. However, given the share is now ex-dividend there is no hurry. I might even (gasp) start watching those charts of Phaedrus for a while!

SNOOPY

[Lizard]

I might even (gasp) start watching those charts of Phaedrus for a while!

SNOOPY

Wow, did that 8.8 earthquake carry this far? I feel as though a rock just moved...

[mccollr]

Time for a good old laugh (X rated)

http://www.geekzone.co.nz/forums.asp?forumid=39&topicid=57842

[whatsup]

Time for a good old laugh (X rated)

http://www.geekzone.co.nz/forums.asp?forumid=39&topicid=57842

Brilliant but is it ALL TRUE?

[Snoopy]

Wow, did that 8.8 earthquake carry this far? I feel as though a rock just moved...


I'm really pointing out that if you invest for income and the dividend has just been paid then you can bide your time until the next dividend is due. I don't think I will become a rabid chartist. But it has to be said the better the liquidity and depth (and for the NZX it doesn't get any better than Telecom) the more likely these charting techniques are to be useful.

Also because I don't stake my investment reputation on 'timing the market' it doesn't necessarily make sense to buy all you want today. Perhaps it might be better to buy half now and the rest in three months time, regardless of what the share price does in the interim? I know what I want to spend on Telecom shares in the next few months. What I don't know is how many shares I will get for those dollars. The market will determine that when purchase time comes. This is what the investment technique of 'value averaging' s all about.

SNOOPY

[PartTimeTrader]

I picked up 10,000 at 2.20, looks like it has recovered a little today at 225. But I had purchased a similar sized stake at 2.35-2.55 before the XT troubles began. Hopefully the whole XT mess will blow over in a few months time.

[winner69]

Is she saying that TEL has got worse since she left .... bring back Theresa I say

Profits half of wat they were when she was in charge ..... bring back Theresa .... please

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10629991

[macduffy]

Is she saying that TEL has got worse since she left .... bring back Theresa I say

Profits half of wat they were when she was in charge ..... bring back Theresa .... please

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10629991

But is it true that the XT/ Alcatel Lucent decisions were made during the Deane/Gattung regime?

Or is that just a nasty rumour?

[Bobcat.]

Alcatel took over Lucent three years ago. Lucent was engaged by Telecom NZ before that takeover to build the XT network (then called UMTS/3G). Alcatel is French, Lucent is American. Americans don't like being accountable to the French. Lucent ran its merry way to complete the XT build, inside of Alcatel (now called Alcatel-Lucent).

Yes, Theresa Gattung was very much a decision maker engaging Lucent when she was in charge...but of course since she's got such a strong marketing bias and has never really trusted engineers, and so is quite comfortable distancing herself from that earlier decision, blaming others. As she sees it, she can always claim to have received shonky advice from her head of technology and other advisors at the time. After all, what does she know about telephony? She was given the CEO role at Telecom for other reasons, much to the delight of the very influencial Victoria Uni-based feminist political lobby and others of similar persuasion.

TG - your lack of humility and sense of responsibility continue to disgust me. Rather than inferring Telecom NZ's shareholders & customers would be better off under your command, 'fess up to the boardroom level deceit you engaged in at the time of the Unbundled bitstream debacle and the lies (marketing fiction) you told shareholders and analysts with a shameless straight face while in command. Your command & control style and blame & shame culture that you promoted is not sadly missed. Good riddance TG.

[Hoop]

TiVo sales have a disastrous launch...no surprise about TiVo sales here on ST..read the posts (last September) from page 82 to 85 on this thread.

[duncan macgregor]

What most of you miss is the reason that we are here on this site discussing this in the first place. The reason that i am here is to invest in companies where the sp plus dividends will make me a decent return on my investment. To invest in any company caught in a long down trend is the path to financial ruin, which a lot of you fail to comprehend. Who cares if they hold the country back or not, or if they are a bunch of rotten cheating bastards. I leave that to the people in charge to sort that out, it is not my concern.
My only concern is my investments, nothing or no one else matters when i do this. If some of you lot thought a bit more like that, you wouldnt be caught holding a dog like this bleating about rights and wrongs.
macdunk Four years after posting that with the Sp halved from what it was then the same people still bleat on about rights and wrongs and the only difference is the new faces swilling at the company trough. Macdunk in repeat mode.

[The GrandMaster]

Macdunk in repeat mode.

Is there another

[duncan macgregor]

Is there another What do you reckon grand one?. Macdunk predicted four dollars before it hit five and was proved wrong. He then predicted three dollars before it hit four and was proved right. He later predicted two dollars before it got back to three. With the SP in a steep downtrend due to arrogence, swilling at the trough,and a general public perception of both, how long before Macdunk predicts the SP will hit one dollar before it hits two dollars?. I would predict it will be when the SP drops below $1-90. Macdunk

[Dr_Who]

Oh no, it gets worst for TEL.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10631374

[sharer]

:(TEL is whingeing loudly on the News about the effects of the Govt rural broadband annmt today. "Loss" of ~$56m/year for 3 years???
Why didn't TEL invest that TSO balancing money to improve the rural network? They've had plenty time - since they were floated!
Instead it seems they've squandered the lot on expensive & frankly ridiculous pay rates for top execs, who quite simply have failed to deliver anything like good value for either shareholders or the customers.
There will be zero.zero sympathy for their latest "P.R." dept outburst.

[GTM 3442]

Telecom will continue to squeal loudly, but in the end, they will go the way of the woolly mammoth.

What do they have ?

1/2 of the Southern Cross Cable. Whoooooops, there's a competitor talking about laying a bigger, brighter, better, cable.
A Copper Network. Well, we're in the process of converting the country to fibre. And VOIP phones run just fine over fibre, so who needs copper ?
The old mobile network. Which is going to be phased out.
The XT Network. Whooooops, plenty of competition there.
Backbone data lines. Whooooops, watch out for that fibre again.

My suspicion is that Telecom has spent years cutting internal costs to turn a profit to be paid in dividends. And that this will come home to roost. Leaving them with a copper network, a mobile network with a really bad reputation, and no money to invest in technology.

I suspect that it could all have been so different if it'd been run as a technology company, not a cash cow.

Wouldn't touch it with a barge pole.

[bull....]

May be breaking to the downside of a 1 year channel very bearish target would be 1.60 in time , of course this suggests dividends will no longer stay the same as now and this was forewarned a while back by the company.
Still a good short.

[winner69]

Telecom will continue to squeal loudly, but in the end, they will go the way of the woolly mammoth.

What do they have ?

1/2 of the Southern Cross Cable. Whoooooops, there's a competitor talking about laying a bigger, brighter, better, cable.
A Copper Network. Well, we're in the process of converting the country to fibre. And VOIP phones run just fine over fibre, so who needs copper ?
The old mobile network. Which is going to be phased out.
The XT Network. Whooooops, plenty of competition there.
Backbone data lines. Whooooops, watch out for that fibre again.

My suspicion is that Telecom has spent years cutting internal costs to turn a profit to be paid in dividends. And that this will come home to roost. Leaving them with a copper network, a mobile network with a really bad reputation, and no money to invest in technology.

I suspect that it could all have been so different if it'd been run as a technology company, not a cash cow.

Wouldn't touch it with a barge pole.

Interesting how all this playing out over time ... a slow gradual decay (like entropic I mentioned in an earler post) which will ultimayely lead to the demise of TEL in its present state.

Sad really but those who have got those dividends over the years are not complaining .... yet

[Jay]

Macdunk looks like he maybe right! SP heading south - lowest it has been for yonks

[beacon]

SP drops below $1-90. Macdunk

How long before your pronouncement comes true again mate?
Kudos

[POSSUM THE CAT]

The main problem is we are trying to have Three world class wireless networks What we need is one seperate wireless network supplier & lot of competing retailers

[POSSUM THE CAT]

Belgarion: Vector might be a better answer & for Fibre internet cable as well

[Zaphod]

The main problem is we are trying to have Three world class wireless networks What we need is one seperate wireless network supplier & lot of competing retailers

Given the size and spread of our population I'm inclined to agree with you, however the devil is who would you entrust with the core network? An SOE? Another private company, perhaps subject to significant regulation? That's the difficulty we'd face.

[Zaphod]

Belgarion: Vector might be a better answer & for Fibre internet cable as well

Yes - I think we're going to see some significant competition emerge from the likes of Vector and their counterparts in other regions. Coupled with the broadband investment planned by the Government and a competitor (perhaps) to the SCC, I think we are in for some exciting times.

As for Telecom, I think they will be forced to pony up their investment in infrastructure.

[Jaa]

The main problem is we are trying to have Three world class wireless networks What we need is one seperate wireless network supplier & lot of competing retailers

This isn't really true, we have 2 world class mobile networks and 1 built on the cheap. XT cost $570m odd, 2degrees have only spent $250m from the cheapest provider.

The surprise really is that it is XT with the problems not 2degrees. The 2degrees guy said in the paper it could easily have been us as they also launched with minimal capacity. They do have the luxury of failing over to the Vodafone network though which is a real advantage.

[Balance]

It would seem that kiwi taxpayers support the ruination of Telecom. Boy are they dumb! ... 10 Reasons

1. They think they are going to get superfast broadband on the cheap - they won't (just some farmers).
2. They think Telecom is a nasty, horrible monoply - It isn't (just poor customer service for far too long).
3. They think Govt is levelling the playing field - It isn't really.
4. They think this isn't vote buying by the Nats - It is (met many farmers in marginal seats that vote labour?)
5. They think ruining a NZ company while enriching foriegned owned rivals will be good for NZ - It won't.
6. They think TEL years of government enforced changes hasn't had its effect on TEL - It has.
7. They think TEL is small, nimble and agile company that can turn on a dime. It isn't (its one of NZ's biggest employers)
8. They think there won't be job losses - There will (cost cutting will force further job lossed overseas)
9. They think services will improve - They won't (focus will go on cost cutting and rural broadband).

... and ....

10. They think that Govt knows best about how markets should function - They don't!

To alll TEL holders out there ... About time you started writing to your MPs and telling them you've had enough and its time to give TEL some breathing space! You might also like to remind the National governments that they're supposed to be the party of "user pays" and "market forces" and "minimal govt intervention" ... Quite frankly, blantant vote buying at the expense of city dwellers (most of us!), and NZ shareholders (many more of us than you realise) so a very small number of rural dwellers can download movies, YouTubes and porn isn't best spend of $45 million.

Destroying a NZ company to boot aint that smart either. Shame on Govt.

discl: don't hold at present and heartily sick of media's very poor reading of the issues here.

Disagree with you, Belg.

Telecom squandered billions in bad investments. We could have had the best telecommunication infrastructure in the world if just $1.5b of the $4 billion lost in Australia was spent in NZ.

Time to give another player a go.

You cannot give a crippled dog new legs.

[Balance]

Balance, something of a backwards looking statement? How long ago was that foray into Oz? If we're going to let another player have a go - Who then? Another foriegn owned multi-national? Want to turn our telecommunications landscape into our banking ladscape where we're at the whim and mercy of overseas interests and have them suck profits out of NZ at an alarming rate?

I'm trying, as NZ media is NOT, to look forward and work out what impact government interference is likely to have. The NZX is going to look pretty weak if TEL continues being whittled away by successive government interference. (Haven't heard much from Mark Weldon on this. I wonder what his view is?)

Forget Mark Weldon - he is a lightweight lucky enough to run a monopoly but is steadily killing the golden goose that lays the golden eggs. He will cash in his options before the goose dies of course and bugger off overseas.

Telecom's XT is an example of how badly run Telecom is. NZ is lagging because Telecom screwed NZ.

If Telecom wants a break, let them earn it.

I am not worried about Telecom being whittled away - it's Telecom shareholders who are losing, not NZ.

Look at Vodafone as an example of a foreign player in NZ - they run circles around Telecom and NZ has been the better for it.

Vector could be a player.

[Tee]

TEL looks like a lame duck. Why does the country's leaders see it fit to add to to its burden. I for one will support TEL.

[Balance]

TEL looks like a lame duck. Why does the country's leaders see it fit to add to to its burden. I for one will support TEL.


Telecom's sp has halved and halved again in the last 10 years.

Next 5 years will be no different - unless Telecom really starts making sound business decisions.

Paying out the money from the sale of Yellow Pages -what was that? Get the sp up so Deane & Gattung could score bonuses? Money should have been used to upgrade the company's infrastructure.

It's all in the past - sure - but who would want to invest in an old technology co like Telecom now?

I can remember NZFP being NZ's biggest co, then Fletchers, then Telecom. Bad management and poor strategic decision making all ultimately contribute to their marginalisation.

[Corporate]

I just changed from Telecom to Vodafone. While I was in the store the sssistant manager was telling me that they have never seen so many people come in frustrated with Telecom and make the change.

[brucey09]

Senor
He is hardly likely to tell you that you are making the wrong decision....is he?

[Dr_Who]

I just changed from Telecom to Vodafone. While I was in the store the sssistant manager was telling me that they have never seen so many people come in frustrated with Telecom and make the change.

I went into a XT store the other day just to check out the place. I ask one of the XT staff if they have Iphones. The answer was "No". I then ask the XT staff if they have an alternative to an Iphone. The answer was again "No, nothing comes close to Iphone". There you go, I rest my case about TEL being a poor performer and why I havnt own their shares since the big tech bubble.

[winner69]

I went into a XT store the other day just to check out the place. I ask one of the XT staff if they have Iphones. The answer was "No". I then ask if the XT staff if they have an alternative to an Iphone. The answer was again "No, nothing comes close to Iphone". There you go, I rest my case about TEL being a poor performer and why I havnt own their shares since the big tech bubble.

Mr Hamburger apparently had the inside knowledge fpr Telecom to get the iphoen for them ... you know all his connections back him in the US and all that .... but failed terribly

But never mind Mr Hamburger doing well as Director in charge of technology or something like that .... must get a bit boring commuting between the US and here to do his job though

[winner69]

Hey Dr ... corporate customers of Geni can get iphones from Telecom next week ... believe this or not but apparently Geni buy a iphone at retail and then do whatever they need to do to make it work on XT network ... with no guarantees

Now thats what i call market leadership for you .... keeping the customers happy and all that

[Dr_Who]

Hey Dr ... corporate customers of Geni can get iphones from Telecom next week ... believe this or not but apparently Geni buy a iphone at retail and then do whatever they need to do to make it work on XT network ... with no guarantees

Now thats what i call market leadership for you .... keeping the customers happy and all that

I dont like the sound of no guarantees. Will it be at a discount that is more competitive than Vodafone? If they can do a deal that is much cheaper than Vodafone, then there is hope of capturing back some market share, but at what price? They will have to spend shiatloads to capture back confidence and market share. They should first start by training their XT store staff. Most of the staff at the stores look like walking zombies that dont give a hoots they sign up the customers or not.

[Oiler]

I went into a XT store the other day just to check out the place. I ask one of the XT staff if they have Iphones. The answer was "No". I then ask the XT staff if they have an alternative to an Iphone. The answer was again "No, nothing comes close to Iphone". There you go, I rest my case about TEL being a poor performer and why I havnt own their shares since the big tech bubble.

Dr ...... I have an I phone on Telecoms XT and it works very well thank you. Yes I was hit by the temporary outages of the network.... but hey **it happens. Until Telecom gets out from being a political football, they will never be able to succeed. Has anyone seen a govt controlled business make money!!!! NO

I am not a Telecom holder but seriously looking to be.

Shouldnt we be kicking the **** out of govt to set Telecom free and be able to play on level playing field :angry:

[Balance]

Dr ...... I have an I phone on Telecoms XT and it works very well thank you. Yes I was hit by the temporary outages of the network.... but hey **it happens. Until Telecom gets out from being a political football, they will never be able to succeed. Has anyone seen a govt controlled business make money!!!! NO

I am not a Telecom holder but seriously looking to be.

Shouldnt we be kicking the **** out of govt to set Telecom free and be able to play on level playing field :angry:

Oiler, the govt left Telecom alone until a few years ago.

What did Tel do with the free reign it was given from 1992 to 2007?

It abused its monopoly position, under-invested in infrastructure, geared up and paid billions to its American owners, went over to Australia and lost billions and belatedly tried to catch up with the rest of the world.

Deane & Gattung should be tried for treason to the NZ people.

Meanwhile, thank goodness the govt has woken up to how hopeless Telecom has been as an entity.

[Brian]

Once upon a time we had a great railway service, we had our own national bank; along with our own insurance co and a world class telecommunications co together with
state housing that lent at the rate of inflation. Our clever govt,s sold the lot. Can you altogether blame the burglars who took advantage of this financial wizardry from clever politicions . The same applys to Telecom today ;Joyce is currying favour with those who want everything for nothing and want it now. The way to handle Telecom is to manipulate it not destroy it. Every business person knows that change management takes a minimum of two years to turn a business around; so the govt. has failed miserably again. You should have been around when taxes were 60 and 70 cents in the dollar. And in spite of progress they are still dishing up the same old delusions

[STRAT]

Oiler, the govt left Telecom alone until a few years ago.

What did Tel do with the free reign it was given from 1992 to 2007?

It abused its monopoly position, under-invested in infrastructure, geared up and paid billions to its American owners, went over to Australia and lost billions and belatedly tried to catch up with the rest of the world.

Deane & Gattung should be tried for treason to the NZ people.

Meanwhile, thank goodness the govt has woken up to how hopeless Telecom has been as an entity.Sorry Oiler but Im with Balance on this one. Cant think of any company I have more distain for. They will never get business from me ever again. Nothing to do with thwe outages either. Havent had a cell phone with em for about 15 years.

Wouldnt rule out buying their stock though :eek2:

[STRAT]

You should have been around when taxes were 60 and 70 cents in the dollar. And in spite of progress they are still dishing up the same old delusionsYoure showing your age there Brian :D

The good ol Muldoon era eh?

[Balance]

Once upon a time we had a great railway service, we had our own national bank; along with our own insurance co and a world class telecommunications co together with
state housing that lent at the rate of inflation. Our clever govt,s sold the lot. Can you altogether blame the burglars who took advantage of this financial wizardry from clever politicions . The same applys to Telecom today ;Joyce is currying favour with those who want everything for nothing and want it now. The way to handle Telecom is to manipulate it not destroy it. Every business person knows that change management takes a minimum of two years to turn a business around; so the govt. has failed miserably again. You should have been around when taxes were 60 and 70 cents in the dollar. And in spite of progress they are still dishing up the same old delusions

And NZ also was steadily going broke at that time.