TEL (Telecom NZ Ltd) [Archive] - Page 6

Hoop

22-03-2010, 12:52 PM

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:

Ditto

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

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....Might have been great for the spongers and low income earners, but the hard working middle/high income earners had to pay 60 and 70 cents in the dollar tax to provide those privileges to all NZers.

Our clever govt,s sold the lot....only when they couldn't keep taxing the "efficient NZ producing $$$ taxpayers" at 60/70%

Dr_Who

22-03-2010, 01:08 PM

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.

I recall the old days where you had to wait for weeks just to get a phone connection. The service is much better now, but no where near international standards with thanks to their dominant position in NZ for so long.

I wouldnt touch TEL. It is getting shafted at both ends, by the govt and their competitors. TEL strategy is all wrong. They are stuck in a rut.

Brian

22-03-2010, 04:48 PM

duncan macgregor

22-03-2010, 05:23 PM

Thank,s folks for your comments, They won,t destroy telecom, and the current price makes the divies so much superior to a lot of other avenues.
I owned a business running three shifts seven days a week; sat down one day and discovered that my return started at thursday lunchtime. my accountant said theres always something left for you. Well it wasn,t enough for the effort involved so i sold out and retired; what a blissfull life since for the lasttwenty four years Brian TEL is destroying its self with little required input from outside sources. Arrogance, greed, swilling at the trough, plus the perception that we know best attitude will see this company eventuially slide into oblivion unless radical change is forth comming. I dont see the change only the eventual downtrend but who knows if they have the brains to turn the tide. Macdunk

Balance

22-03-2010, 05:48 PM

Alas Brian, the Govts interference with regards how the Telecommunications Service Obligations (TSO) will be replaced (kind of) by the Telecommunications Development Levy (TDL) to ensure farmers enjoy high-speed rural broadband that is going to be funded by Taxpayers and TEL shareholder and some other telcos .... will ensure the current divie is not maintained. The divie will fall and TEL's share price with it.

Due govt interference, and the huge uncertainancies created by NZ Governement interferance!!!, the yeild will probably stay at about 10% (or more) as a high premium yeild will be required for any investor to get involved with TEL!

It makes me laugh out loud how this Governemnt talks about catching up with Australia and then they do this! ... Oh hang on - OZ Govt is doing the same for Telstra ... Is this catching up? Making the same ballsup as the Aussies?

Don't assume Tel's div is maintained. That's what investors thought when the sp was $6.00 - div will stabilise sp.

NZ govt's $1.5 b broadband roll out in conjunction with, say, Vector will effectively sideline Tel into a fringe player. And NZ will be the better, not worse for it.

Balance

22-03-2010, 06:08 PM

Oiler

22-03-2010, 06:25 PM

Jaa

22-03-2010, 08:31 PM

Um ... Isn't that what I said?

Oh goody ... With VCT 75% owned by a governement department I'm really pleased to see our sharemarket becoming a trading ground a government controlled entity! ... and further goodie ... VCT have a presence in Auckland an Wellington with fibre. Are they going to build networks in the rest of the country? Nope! They're going to do what every other TEL competitor has done which is cherry pick the most profitable routes and leave the rest for TEL. Nice backdoor nationalisation of the telelcommunications network. Great stuff for NZ

You can hardly say Network Waitaki or Eastland Group are Auckland focussed!!

Vector is only one member of the regional fibre group. The rest are your local, low cost, no nonsense, engineer run regional lines companies (like Vector and pointedly the opposite of Telecom) mostly owned by community trusts around the country. These are the organisations that brought NZ electricity 75-100 yrs ago when no one else would or could despite immense hurdles and geographic problems. All of them already have significant fibre assets linking their substations together and many like Counties Power have been providing Telco/ISP services successfully for many years and at speeds and prices that Telecom has been unable to match.

Their sheer number will ensure competition at the margins where it counts and dilute any systemic risk, if one fails or under delivers a stronger lines company can just take it over.

If Telecom or that ridiculous Canadian company get the contract over this diverse community focussed group then the Government really has lost it.

Have a look at the below list and see if you still think that Telecom cares more about regional NZ than this group:
http://www.nzrfg.co.nz/members

Balance

22-03-2010, 08:51 PM

:mad ;:

When are we going to get govt out of controlling business? :t_down:

When businesses actually deliver.

Telecom has not delivered. It has squandered billions on ill-fated adventures overseas and bad technological choices.

moimoi

22-03-2010, 09:35 PM

The recent article on the former chief executive indicated that there was significant pressure to choose an alternative mobile network, which was brought to bear by an "elected" group of politicians at the highest level, in order to provide competition. partly then, that group is liable for the CDMA selection, clearly the wrong one.

""Belg, I think VCT has been better managed than Telecom.""........VCT, also has been a joke, "investors" are yet to recoup the IPO price since listing. This is controlled by an old boys club that has a specific set of interests at the forefront of mind. Growing the company, under any standard definition of growth, is not one of them.

Can you name one single benefit of selling the Wellington network. At the time we were fed the standard marketing dept line of "reduction of debt and allowing reinvestment back into the business". Show me the reinvestment.?

Of annual operating revenue of $1.16B, the technology department of VCT provides $68M. Approximately 5%. In other words its miniscule.

VCT does not have the drive, energy, capacity, or technological capabilities to roll out such.

Personnel expenses to obtain the $533M in revenue from the electricity distribution business are $8.5M....to derive the technology departments $68M in revenue Personnel expenses are $5.9M.

Further more, The very fact the govt is happy to accept 16 different suppliers to roll out a broadband network is inefficient by definition.

And if anyone thinks that $300M will cover the entire cost of getting 100Mbps to 97% of the school system, majority paid for by a tax on existing telecom users, then help yourself to some ambien.

TEL is the only NZ company capable of rolling out a nationwide network, the rest are just fleas piggy backing on what has already been paid for by others.

IMO.

peat

22-03-2010, 09:47 PM

yes Vector isnt really known for being well - managed I wouldnt have thought... look at the stoush that Stiasnny had a few years ago when three directors mass resigned on him and there were huge articles in the press focussing on his abrasive personality.
Personally I think theres a fair chunk of life left in the copper network in this country especially. Dr Who (see Vector thread) its ridiculous to put fibre to the door until that second cable to Aussie and America is built. the backbone couldnt handle it so you would just be transferring the choking point to another part of the network.

Did anyone else notice the irony that the poster who queried the govt for 'opening the skies' complained about govt controlling business , as thats exactly what they werent doing!

mattyroo

23-03-2010, 12:49 AM

:mad ;: are they going to build a network ....... hell no they wont.

As you say they will cherry pick and leave the crumbs to the govt controlled Telecom to fight on.
To me it is no different than the "open skies policy" , let anybody come in and cherry pick the main trunk flights and leave AIR to pick up the regional and crumbs on the main trunks. Can AIR go to OZ and do the same? NO

When are we going to get govt out of controlling business? :t_down:

Oiler - I agree we need to get government out of controlling business, but the analogy you use is completely backwards.

By creating the open skies policy, the government has got out of controlling this particular segment of AirNZ's business, opening up competition on the main trunk routes. You will well know that you cannot get a ticket for love or money some days between Auckalnd and New Plymouth, because AirNZ have this and most other regional routes sewen up, due to the lack of competition, which they do exceptionally well out of. AirNZ also do well out of the main trunk routes, due to all the pigs at the trough (otherwise known as politicians and beaureaucrats) whom only buy the expensive seats on these routes.

Now, if only the Australain gummint would get out of the avaiation business in Oz and create a similar open skies policy, AirNZ would have a chance at making a quid or two on some of the routes ex OZ. It would appear to me, that to work for the ACCC, you have to have shares in QANTAS - look at the recent decision blocking AirNZ flying from Sydney to Vancouver, and the struggles they have had trying to get permission to fly from Oz to South Africa.

In saying all of this though, Telecom have deserved pretty much everything they have got, they have never had any interest in delivering service to the rural community, even where there is a profit to be made. And them wanting to get in on the pigs back that is the National Broadband Plan, is only because they are sh*t scared that they will eventually lose their monopoly in this space. Telecom's plan for the broadband infrastructure is far short of what the NZRFG is proposing.

No matter who gets the contract, I will guarantee one thing: The cost will balloon, and you and I will be left to pick up the tab......

Dr_Who

23-03-2010, 07:46 AM

TEL have spent too much time and money taking care of its own executives and major owners in the past and present and have little left taking care of NZ, hence the infrastructure is backwards and needs upgrading. I ve been warning people close to me about TEL since the tech bubble days. Those that listen would have done well.

I will be very surprise if they can maintain div in the future.

Balance

23-03-2010, 08:44 AM

Too many posters here bought Tel thinking they could not go wrong under $2.50, especially during the XT outages.

The rural broadband plan is not new - analysts have it in their models and provided risk weightings of anything from 25% to 100%. Telecom downplayed it so blame Telecom, not the govt.

No point screaming interference by the govt when Telecom brought it on itself by pxssing billions into ill-fated ego-driven adventures in Oz and bad technology - whilst ripping NZers blind by overcharging and under-investing.

upside_umop

23-03-2010, 09:36 PM

It never should have been listed in the first place. There are some businesses that cant operate efficiently in the hands of the private sector. They need to be government controlled to ensure all of the positive externalities are had. Unfortunately for telecom, the positive externalities were never going to flow to their bottom line.

It has been said that a world class broadband system (fibre to the door etc) will positively reflect in GDP growth by around 2% through increased innovation and efficiencies (around $3 billion per annum). You then have the investment from the $3 billion which you could easily say translates into around 6 billion with a conservative PV.

How much would telecom see of this $6 billion? Well, not enough to cover their investment. Kiwi's arent prepared to pay the high costs of a roll out for this essential infrastructure to telecom for telecom to get an adequate return on investment, so why would they bother? BUT the government are as the government WILL see the positive externalities flow to their bottom line, GDP per capita.

On another note, people who say that telecom are a rip off need to put it into perspective...from which angle? It should always balance right? Ie, if telecom are such a rip off to customers ya dee ya...then the shareholders should be reaping the rewards, right? Here is clear evidence that nobody is winning. The shareprice is at all time lows, and our internet price and speed remains internationally crappy (not to mention other services). Its not telecoms fault that NZ is the same size as the UK but with a ~6% of their population and therefore cant gain economies of scale.

Telecom should never have been listed in the first place. Good on the government for stepping up and noticing that this infrastructure is a must and that telecom could never deliver.

There are other pieces of infrastructure that should never be listed aswell. Transmission lines, railways etc. I know some will debate railways, but when you consider how much cars cross subsidize trucks, then you will know railways should be used. Anyway, another topic.

Heres an idea, the government could come out and buy TELs network outright now, and apply a riskfree rate of return on the assets that ISP's must pay. The govt raise money for the upgrades in infrastructure (fibre) on the debt market at the risk free rate, essentially costing them nothing, but meanwhile increasing broadband speeds and prices. Hell, TEL would probably pay somebody to take the lines away. Anybody care to guess what or know what TEL required rate of return currently is?

I'm tired, but I guess that made sense?

minimoke

24-03-2010, 09:06 AM

And in the mean time more problems with the XT and CDMA network yesterday with users experiencing outages between 8.00am and 11.00am.

Brian

24-03-2010, 09:47 AM

You all have different ideas and rightly so. My interpretation is a consortium of telcos will lay the fibre and carry on as usual. The financial qualifications of Joyce are being questioned and if he can find a way to save face there won,t be any cherry picking. I am going to see what transpires before selling.
Balance ; When and if Vector lays fibre in parallel with high freqency power cables i think you will see some very interesting electrical interference taking place

Phaedrus

24-03-2010, 09:53 AM

When and if Vector lays fibre in parallel with high freqency power cables i think you will see some very interesting electrical interference taking placeFear not, Brian, there is no chance of that. Fibre is non-metalic and transmits only light so there is zero chance of any inductive interference from adjacent power cables.

biker

24-03-2010, 10:09 AM

......................No point screaming interference by the govt when Telecom brought it on itself by pxssing billions into ill-fated ego-driven adventures in Oz and bad technology - whilst ripping NZers blind by overcharging and under-investing.

Very well put. Totally agree.

ENP

24-03-2010, 10:32 AM

macduffy

24-03-2010, 10:37 AM

When has telecome ever been a good investment? The company seems o be declining rather than growing and they don't have any real competitive advantage over other established companies in the same industries.

TEL was a great investment for shareholders who bought at the float - around $2? - and sold during the next few years at $7, $8, $9, $10.

But that's got nothing to do with its merits, or otherwise, as an investment in 2010!

duncan macgregor

24-03-2010, 11:33 AM

Investment prospects come and go nothing lasts for ever. TEL had its day in the sun abused its position, paid millions to the arrogant lady who precided over the demise of share holder wealth. I think top dog still gets paid seven million swilling at the trough one way or the other this financial year as the share holders bleat about GOVT interferance. TEL have a very poor public image until that changes the downtrend will continue. I fail to understand why any one would consider TEL as an investment today going forward. , Macdunk

Snoopy

24-03-2010, 12:09 PM

It never should have been listed in the first place. There are some businesses that cant operate efficiently in the hands of the private sector. They need to be government controlled to ensure all of the positive externalities are had. Unfortunately for telecom, the positive externalities were never going to flow to their bottom line.

After reading her autobiography, you might be interested to know that former CEO Theresa Gattung agrees with you.

This from page 171:

"After news of my leaving came out, both David Cunliffe and Helen Clarke were quite charitable about me, but Cunliffe made the point that Telecom had been very focused on shareholder value
and not very focused on its reponsibilities to the country. No CEO of a listed company lasts very long if they're not focused on maximising return to investors, and therein lies the rub. The way Telecom had been privatised, not enough kiwis had a financial stake in its success, so I believe the public preference would have been for it to be an SOE (state owned enterprise), with a dual purpose of being run as a business but also explicit reponsibility to the country through crown ownership and oversight by the minister."

It has been said that a world class broadband system (fibre to the door etc) will positively reflect in GDP growth by around 2% through increased innovation and efficiencies (around $3 billion per annum). You then have the investment from the $3 billion which you could easily say translates into around 6 billion with a conservative PV.

It may have been said but is it true? From p162 of the autobiography

"More recently in November 2009 a government funded survey of 6000 firms in New Zealand by Waikato University and Motu Economic research consultancy demonstrated the same thing - there is no link between the availablility of high speed broadband and business productivity."

"The report also said that despite well articulated pleas for upgraded internet access, reference to rigorous research that quantified benefits from actually occurring from network upgrades was generally absent."

SNOOPY

Snoopy

24-03-2010, 01:06 PM

When has telecom ever been a good investment? The company seems to be declining rather than growing and they don't have any real competitive advantage over other established companies in the same industries.

If one person bought a block of Telecom shares when they were listed in July 1991, and their neighbour put the same money into a bank term deposit, the Telecom shareholder would be far better off, even if capital growth in Telecom shares was zero (which it hasn't been as critics conveniently forget the 61cps capital return to shareholders in October 2007). The reason for the superior performance of Telecom is of course dividends which have been significantly higher than bank interest rate returns since listing.

The fact that the company is declining in sales terms is not surprising since with the selling of the Yellow Pages Group, Telecom is now a smaller company. Despite this, Telecom is declining in earnings per share terms as well which isn't good, but does not rule out Telecom as a good investment. Why? Because investment returns depend on the difference between market expectations and actual earnings. If market expectations are low then even flat sales and a stable profit can lead to a significant share price rise as a company's PE ratio is rerated by the market.

Telecom has a huge competitive advantage in being the incumbant telco company in New Zealand. The only independent competitors are:

1/ Telstraclear who have bits of fixed lines in Wellington and parts of Christchurch,
2/Vodaphone with their mobile network and
3/ to a lesser extent mobile provider 2 Degrees (which IIRC piggy backs off the Vodaphone network outside of main centres).

There is no-one in NZ apart from Telecom who can offer a total communications (fixed/mobile/data) package. Even those that say they can are just reselling Telecom wholesale product .

Technologically I think the Telecom XT network is half a generation ahead of what Vodaphone can offer, with the caveat 'when it can be made to work reliably'. If reliability is all important, I think the alternative Telecom mobile 027 network is more reliable and has better geographical coverage than Vodaphone.

If all of that isn't a 'real competitive advantage', it cetainly could be a 'real competitive package' under the right management and market conditions. With no growth built into the TEL share price, it is not hard to build a very attractive investment case for Telcom with the shares languishing at $2.14.

SNOOPY

discl: hold TEL

Snoopy

24-03-2010, 01:21 PM

Too many posters here bought Tel thinking they could not go wrong under $2.50, especially during the XT outages.

The fact that Telecom have not fixed XT yet is not a problem for those with an investment horizon of more than six months.

The rural broadband plan is not new - analysts have it in their models and provided risk weightings of anything from 25% to 100%. Telecom downplayed it so blame Telecom, not the govt.

The market sets the price for TEL shares, and jaw boning by Telecom can only affect the market price so much. If, as an analyst, you considered that the rural broadband risk to be 100% built into the share price then from an investment perspective then the worst possible actual announcement will be investment neutral. Therefore gambling on something better than the worst possible announcement by buying TEL shares would have been a very sound investment strategy, even if *in this instance* there was no payoff.

SNOOPY

Dr_Who

24-03-2010, 02:06 PM

Anyone noticed that The Yellow Pages gets thinner each year? If you have a good computer and internet connection, you dont need yellow pages booklet anymore. Google does a better job.

peat

24-03-2010, 04:57 PM

or good quality mobile phone!

connected via XT ??

:p

Brian

25-03-2010, 10:59 AM

Anyone noticed that The Yellow Pages gets thinner each year? If you have a good computer and internet connection, you dont need yellow pages booklet anymore. Google does a better job.

Who is going to give that good internet connection?

POSSUM THE CAT

25-03-2010, 11:21 AM

The yellow pages will not worry Telecom they do not own it so it has no effect on them.

Logen Ninefingers

25-03-2010, 02:03 PM

Another XT exec leaves Telecom
BusinessDay.co.nz Last updated 13:50 25/03/10

Telecom's XT debacle has led to the departure of another senior executive. The telco announced today its head of retail operations, Paul Hamburger, is to leave the company at the end of his contract in July.

Hamburger joined the telco 18 months ago, and has regularly commuted between his home base in Florida and New Zealand.

Telecom chief executive retail Alan Gourdie said Hamburger's role covered the establishment of XT mobile services, but his responsibilities did not include the building or management of the XT network infrastructure.

“With the launch and consolidation of XT behind us, Paul has made the choice to move on from Telecom at the end of his current contract period," Gourdie said.

“Paul and his team were responsible for such XT innovations as One Rate plans; pre-paid mobile broadband bringing a vastly improved range of devices to customers; and an exciting refresh of Telecom’s retail scores across New Zealand."

The XT network has been plagued by network disruptions in recent months, affecting hundreds of thousands of its customers.

Hamburger's last day of work at Telecom will be July 8.

Hamburger is the second senior Telecom executive to leave in the wake of the XT problems. Group chief transformation officer Frank Mount resigned in February.

winner69

25-03-2010, 04:21 PM

****e .... that'll leave his personal cook out of a job as well

Scuffer

26-03-2010, 12:46 PM

macduffy

26-03-2010, 04:23 PM

seems strange that two opposing governments have decided to monster Telecom I wonder if it has anything to do with overseas investors owning a large slab of our telecommunications systems, would be interesting to know if that percentage of foreign ownership is reducing.

It's probably because its politically popular to "take on" the nasty, big telco.

There's more voters and TEL customers than there are TEL shareholders!

peat

29-03-2010, 12:10 PM

RSI divergence on the daily....??
fib extension of the rise has hit 1.618 level ?

Phaedrus

29-03-2010, 07:10 PM

What's to like?

Price flat/falling.
OBV flat/falling.
No divergences.
Unbroken downward trendline.
Trailing stop unbroken.
Medium-term (2010) downtrend still intact.
Recent new (20 year?) low.
That's just for starters!

http://i602.photobucket.com/albums/tt102/PhaedrusPB/TEL329.gif

Big volumes? Well, slightly above average, anyhow.
Rising price? Up a single cent - please curb your enthusiasm!
RSI divergence? Only on TEL:ASX as shown on Peat's chart.

peat

29-03-2010, 09:10 PM

actually my chart is TEL:NZ.
I dont know why Phaedrus's chart doesnt show divergence in the RSI - mine definitely does.... however.... its not critical in the sense that I'm not suggesting for a moment that TEL is a buy, just looking at how TA may find some reasons to begin to consider it one.

Phaedrus

30-03-2010, 11:27 AM

Peat, the problem is that our RSI plots are quite different. Yours shows a low of about 20 on Feb 9, while mine shows >30 at that point. One of these must be wrong - I reckon that it is yours. Here is the period in question as plotted by IncredibleCharts using Yahoo data, with Feb 9 marked by a vertical line. You can see that their RSI is the same as mine which was plotted using local data.
http://i602.photobucket.com/albums/tt102/PhaedrusPB/TEL330.gif

duncan macgregor

31-03-2010, 10:27 AM

I would think that sooner or later TEL will become a buy for a trader, but would venture to say it would be a poor choice for the long term value investor. I base that on increased competition plus the expensive upgrades to new technology to even stand still. TEL are left with outdated systems that must be replaced to satisfy a disgruntled public whose perception of the company is at an all time low. I would think rickety old telephone poles rigged with copper wire will be non existant in a few short years. Perhaps TEL will turn its self into fire wood and scrap copper merchants in order to keep management swilling at the ever shrinking trough. Macdunk

macduffy

31-03-2010, 11:03 AM

I agree with duncan on this.

TEL might become a good trade at some stage but not a good long term investment IMO. The copper wires will provide a diminishing return but the investment needed in new technology plus the increased competition will prevent a return to the glory days. Government regulation will also continue to make life difficult for TEL.

ENP

31-03-2010, 11:07 AM

TEL might become a good trade at some stage but not a good long term investment IMO.

If you bought today at $2.15 and the dividends over the longer term continued to be $0.24 that's a return of 11.1% That's pretty good I would have thought?

duncan macgregor

31-03-2010, 11:29 AM

If you bought today at $2.15 and the dividends over the longer term continued to be $0.24 that's a return of 11.1% That's pretty good I would have thought? I can remember people making similar statements as the Sp plummeted faster than the dividends made up for the drop. Nothing remains static in the business world, the prospects either worsen or improve. TEL prospects are in free fall until that changes its only a traders share. Macdunk

bung5

31-03-2010, 11:34 AM

If you bought today at $2.15 and the dividends over the longer term continued to be $0.24 that's a return of 11.1% That's pretty good I would have thought?

very much doubt dividends can be maintained at 0.24c. To provide that they are having to use debt. Also market cap is going to keep degrading with companys profits as it looses its market share week by week.

winner69

31-03-2010, 11:50 AM

Jeez how the might have fallen .... dividends in June 2005 year were 48.5 cents (ASB report) and they have dropped to 45.5 cents, 35.5 cents, 29 cents to 24 cents in June 09 year ... and punters are saying less than 20 cents this year

Amazingly in 2000 TEL dividends were 36.8 cents

Seem to be a never ending story here .... and the chart reflects it

upside_umop

31-03-2010, 12:01 PM

After reading her autobiography, you might be interested to know that former CEO Theresa Gattung agrees with you.

This from page 171:

"After news of my leaving came out, both David Cunliffe and Helen Clarke were quite charitable about me, but Cunliffe made the point that Telecom had been very focused on shareholder value
and not very focused on its reponsibilities to the country. No CEO of a listed company lasts very long if they're not focused on maximising return to investors, and therein lies the rub. The way Telecom had been privatised, not enough kiwis had a financial stake in its success, so I believe the public preference would have been for it to be an SOE (state owned enterprise), with a dual purpose of being run as a business but also explicit reponsibility to the country through crown ownership and oversight by the minister."

Thats interesting Snoopy, as these are personal thoughts that I have built on my own. I would like to see if there are any other countries out there with a similar situation? Any countries with a low population density, on the outskirts of the world (not close to international cable) and suffering a similar problem to NZ with regards to broadband.

It may have been said but is it true? From p162 of the autobiography

"More recently in November 2009 a government funded survey of 6000 firms in New Zealand by Waikato University and Motu Economic research consultancy demonstrated the same thing - there is no link between the availablility of high speed broadband and business productivity."

"The report also said that despite well articulated pleas for upgraded internet access, reference to rigorous research that quantified benefits from actually occurring from network upgrades was generally absent."

SNOOPY

I'm in two worlds about the positive spin offs and the translation into the economy. I do feel, however, that if we were well behind the rest of the world in internet technology then they would have a relative advantage over us. Ie, if the rest of the world upgrades to fibre and we stay as is. Its like being on dial up compared to broadband. With the way programs (software) are going, with their size, complexity and online base (xero for example) then its quite obvious increased internet speed will help with ease of use etc. Who knows what the future will bring, but it does seem essential that we do keep up with the world WRT internet as not doing so is just a too much of a risk.

I still believe the govt should buy the network back and lease back at risk free rate (or slightly more to cover some capital costs too), just to wipe the slate clean, and upgrade using an independent panel as the experts. They should probably try and weasel their way in and get a 4th generation cell network up and running while they're at it, making it powerful enough for the whole country with the aim of getting all the cell networks on board (sure there would be some uproar from 2 degrees, vodaphone etc but meh, the country is more important). Then, we will have a true, competitive market. What do you reckon of that idea snoop dog?

Snoopy

31-03-2010, 01:46 PM

I'm in two worlds about the positive spin offs and the translation into the economy. I do feel, however, that if we were well behind the rest of the world in internet technology then they would have a relative advantage over us. Ie, if the rest of the world upgrades to fibre and we stay as is. Its like being on dial up compared to broadband. With the way programs (software) are going, with their size, complexity and online base (xero for example) then its quite obvious increased internet speed will help with ease of use etc. Who knows what the future will bring, but it does seem essential that we do keep up with the world WRT internet as not doing so is just a too much of a risk.

Let me just expand on my quote from p162 of the TG autobiography
"More recently in November 2009 a government funded survey of 6000 firms in New Zealand by Waikato University and Motu Economic research consultancy demonstrated the same thing - there is no link between the availablility of high speed broadband and business productivity. The report uncovered a 10 percent productivity gain when when businresses first adopted broadband, but no link between broadband and overall productivity"

I have no knowledge of the Xero online accounting software. But I suspect most of the accounting information 'treated' over the net is in the form of text, not graphics. So I doubt that speeding up broadband will be important to the success of this business. Concurrent multiuser software with detailed video input might be another matter. But what commercial products require that? Teleconferencing reportedly happen just fine with the broadband tech we have now.

I still believe the govt should buy the network back and lease back at risk free rate (or slightly more to cover some capital costs too), just to wipe the slate clean, and upgrade using an independent panel as the experts. They should probably try and weasel their way in and get a 4th generation cell network up and running while they're at it, making it powerful enough for the whole country with the aim of getting all the cell networks on board (sure there would be some uproar from 2 degrees, vodaphone etc but meh, the country is more important). Then, we will have a true, competitive market. What do you reckon of that idea snoop dog?

I guess the counterpoint to the government owning and running the 'fixed' network is that it puts the onus on the government to pick the right technology, something they would claim to be no good at doing. Interestingly Telecom no longer differentiate between their fixed and mobile network when reporting their results. Both are listed as part of 'Telecom Retail' as though they are now managed as an integrated service. If Telecom themselves don't really know the future individual importance of fixed line vs mobile vs data services, what hope would the government have of dictating which way the infrastructure investment dollar should go?

As far as mobile goes, my impression is that the problems being seen in XT are not technologically insoluble. As CEO Reynolds said, he can build you a mobile system with 100% redundancy built up to cope with any outages. But the price he would have to charge for that service would be consummately 100% more than XT pricing today. And most consumers just would not wear it. It is more a question of optimising the capital spend to meet expected consumer use and pricing expectations. The idea that we in NZ are just too small to have more than one mobile network doesn't wash with the practical experience of what we have seen in NZ, so far.

As far as 4G technology mobile goes, I am not really sure what that means (any enlightenment from Telecom techs welcome). But my impression is that 4G can be achieved by 'upgrading the existing boxes and towers', a relatively cheap upgrade, rather than building something all new from scratch.

SNOOPY

Brian

11-04-2010, 09:13 AM

bung5

11-04-2010, 10:40 AM

Interesting to note that overseas countries charges for broadband [ who have millions more residents than n.z] listed for comparison lately when adjusted for exchange rate come out pretty much the same as n.z . The fibre plan by govt. is only duplication of infrastucture . Who is going to use this fibre? And who other than the major telco,s can provide the maze of services now available? In view of the new sattelite portal being opened up by telecom and yahoo with new services on top of all else i believe there will be a resurgance in profit and share price. Couple this with the recent announcement of the return of imputation credits likely next financial year and more investment is on my agenda.

There is no duplication with telecoms infrastructure. Telecom only have limited fibre and in the main city's CBD. Who will used the fibre? - Everyone will use it, why be on a copper network that can only run at 1/100th of the speed when you can be on the fibre. There will be a swag of "telecos" that will appear once the infrastructure is open up to anyone to compete on. I say "telcos" because they won't be that anymore they will be ISPs because telephony is a dead technology. VOIP is the new standard and will run over the internet at a fraction of the cost. I do not know where you got your price comparisions from but nearly any 1st world country I check the price is about half and no data restrictions.

In the short term telecom might gain. But its long term future is downhill unless it can put some serious investment into the internet.

Snoopy

14-04-2010, 06:04 PM

I say "telcos" because they won't be that anymore they will be ISPs
because telephony is a dead technology. VOIP is the new standard and
will run over the internet at a fraction of the cost.

Long term future is downhill unless it can put some serious investment
into the internet.

'Serious investment into the internet'? From the FY2008 Annual
Report, p4

"(Our fibre to the node upgrade) is a $NZ1.4billion dollar investment
that will enable the delivery of fast broadband connections to 80% of
New Zealanders by 2011 at speeds of at least 10Mbps."

and page 20

"Globally the development of IP (internet protocol) should enable a
move away from the current model of specialised devices accessing
dedicated services using independent platforms, towards more
versatile devices that will access multiple services across common
infrastructure. As part of the PSTN voice replacement programme,
Telecom's New Zealand customer base will be migrated from existing
legacy platforms to an all IP network by 2020."

Yet you think TEL are not serious about investing in the internet,
bung?

SNOOPY

bung5

14-04-2010, 09:17 PM

'Serious investment into the internet'? From the FY2008 Annual
Report, p4

"(Our fibre to the node upgrade) is a $NZ1.4billion dollar investment
that will enable the delivery of fast broadband connections to 80% of
New Zealanders by 2011 at speeds of at least 10Mbps."

and page 20

"Globally the development of IP (internet protocol) should enable a
move away from the current model of specialised devices accessing
dedicated services using independent platforms, towards more
versatile devices that will access multiple services across common
infrastructure. As part of the PSTN voice replacement programme,
Telecom's New Zealand customer base will be migrated from existing
legacy platforms to an all IP network by 2020."

Yet you think TEL are not serious about investing in the internet,
bung?

SNOOPY

So they start investing to decrease their profits? ... it will kill them. They currently charging something like $30- $40 for a fixed line? They can't justify this charge on VOIP...
I can go and get it for free from someone else. This opens them up to the competition of the world.
Anyone can offer VOIP service to you... skype for example.
Telephony is dead.... that is their core buisness and where they generate a lot of revenue from at the moment.
They can't compete with the government for the backbone network either.10Mbps will be nothing compared to the 1000Mbps that fibre to the door will be able to provide in the future.

Another pacific link thats in the pipeline owned by outside investors only going to take more profits from telecom.

Internet only going to get cheaper with more competition.

minimoke

15-04-2010, 09:11 AM

.10Mbps will be nothing compared to the 1000Mbps
1000mbps??. We hear about these fantastic fibre speeds (which I think 100mps is more realistic) but what do we want it for. If you want VOIP you can, arguably run this over copper dial up and works OK at 180kbps. Its already here and its dirt cheap. But Fibre? Sure you'll be able to get your HD TV streaming (but you only need 10MPS for one channel but do you have any idea how much that will actually cost you and how many days into yoru month your data cap will be blown? And what about the bottle necks. you'll still have copper from your gate and all sorts of pottenilaly dodgy connections / interference between your gate and modem as well as having to cope with the lack of international line capacity. NZ hasn't even expoited its copper potetnial yet but thats not going to stop the governemtn spendig our hard earned cash which could, again arguably, be spent on better projects.

bung5

15-04-2010, 09:52 AM

1000mbps??. We hear about these fantastic fibre speeds (which I think 100mps is more realistic) but what do we want it for. If you want VOIP you can, arguably run this over copper dial up and works OK at 180kbps. Its already here and its dirt cheap. But Fibre? Sure you'll be able to get your HD TV streaming (but you only need 10MPS for one channel but do you have any idea how much that will actually cost you and how many days into yoru month your data cap will be blown? And what about the bottle necks. you'll still have copper from your gate and all sorts of pottenilaly dodgy connections / interference between your gate and modem as well as having to cope with the lack of international line capacity. NZ hasn't even expoited its copper potetnial yet but thats not going to stop the governemtn spendig our hard earned cash which could, again arguably, be spent on better projects.

On the proposed fibre network there won't be any copper bottle necks. There also won't be any need for data caps.
You seem to underestimate the requirement for faster broadband. People were saying we would not need faster than 256Kbs back in 2000
Copper has high maintenance costs and our network is over 50 years old. Agreed we can get a lot more out of the copper but no where near as much as a fibre network.
In any case that is not the argument. Bottom line is Telecom is going to be loosing revenue.
You seem to be ignoring the fact that VOIP can be offered by anyone for a fraction of the cost now??

Silverlight

15-04-2010, 10:12 AM

15 April 2010

NZX Regulation Announcement
Telecom Corporation of New Zealand Limited (TEL)
Trading Halt Of Securities

NZX Regulation advises that, at the request of the company, it has placed a trading halt on Telecom Corporation of New Zealand Limited Ordinary Shares (TEL) pending a material announcement by the company.

ENDS.

bull....

15-04-2010, 11:09 AM

Possible sale of aapt or wholesale unit.

For a laugh maybe the new xt network is going to be closed down.

minimoke

15-04-2010, 11:57 AM

Bottom line is Telecom is going to be loosing revenue.

I guess we could look offshore to see what is happening. For a start they are not only getting fibre to the last mile but they are getting rid of copper in the house. That last 20m will be a bottle neck where the optical / electrical conversion occurs.

So if we want full fibre I could go with Verizon and they'd give me 15mps download 5MPS upload for just US$49.99 (plus I'd need a phone line. For another us$40 I'll get 220 digital tv channels and 40 HD channels (great more channels of crap to not watch).

But hang on - telecom already gives me 12mps download for NZ$60 uncapped

I could go for the 50mps download plan ( with 20MPS upload - but I'm not really woorried about uploads) all for us$140 a month. But wait - I may not get 50mps becasue they reckon it could be limited by interent and network congestion and slow website servers.

I'm not sure it is just Telecom that risks revenue on fibre - there is a fair bit of pay back required with getting it to the door throughout NZ with our limited poplation and terrain

bung5

15-04-2010, 12:52 PM

I guess we could look offshore to see what is happening. For a start they are not only getting fibre to the last mile but they are getting rid of copper in the house. That last 20m will be a bottle neck where the optical / electrical conversion occurs.

So if we want full fibre I could go with Verizon and they'd give me 15mps download 5MPS upload for just US$49.99 (plus I'd need a phone line. For another us$40 I'll get 220 digital tv channels and 40 HD channels (great more channels of crap to not watch).

But hang on - telecom already gives me 12mps download for NZ$60 uncapped

I could go for the 50mps download plan ( with 20MPS upload - but I'm not really woorried about uploads) all for us$140 a month. But wait - I may not get 50mps becasue they reckon it could be limited by interent and network congestion and slow website servers.

I'm not sure it is just Telecom that risks revenue on fibre - there is a fair bit of pay back required with getting it to the door throughout NZ with our limited poplation and terrain

There would be no bottle neck with 20m of copper. This can quite happily run at 1000Mbs with no added latency.

They don't give you 12Mpbs more likley you would experience half of that and if your on the Telecom Un capped they manage your data so much that anything other than HTTP is serverly restricted to speeds or around 1 Mp s

Who cares if it's not just telecom that risks revenue... All you should care about is that they are going to loose revenue.

bung5

15-04-2010, 01:03 PM

My guess is that TEL is going to provide more detail about the effects of govt interference.

Yeah most likley . Telecom is in the ditch

biker

15-04-2010, 01:06 PM

Why does the ASX always provide more information?
The ASX announcement includes the TEL letter to them which says it relates to financial forecasts and the halt will be approx 2 hours.
Typical NZX 'mushroom' approach and just another minor example of the cowboy market in NZ.

minimoke

15-04-2010, 01:13 PM

They don't give you 12Mpbs more likley you would experience half of that and if your on the Telecom Un capped they manage your data so much that anything other than HTTP is serverly restricted to speeds or around 1 Mp s

So if I get a download of 21mps I'm not really getting that?

Silverlight

15-04-2010, 01:28 PM

15 April, 2010

Telecom revises financial guidance and provides update on regulation

In accordance with listing rules, Telecom has today announced changes to its FY11 to FY13 financial guidance. FY10 financial guidance remains unchanged (refer appendix).

FY11 to FY13 Guidance Changes

The financial guidance provided below assumes retention of AAPT and does not reflect any impact from the Government’s Ultra Fast Broadband initiative (“UFB”), which is likely to reshape the industry.

Previous Guidance
Previous Guidance
restated
in dollar terms New Guidance
in dollar terms
FY11
EBITDA +4 to +6% $1.820 billion to $1.855 billion $1.720 billion to $1.780 billion
CAPEX Not provided Not provided $1.0 to $1.1 billion
FY12
EBITDA +4 to +6% +$70 million to
+$110 million +$20 million to +$80 million
FY13
EBITDA +4 to +6% +$75 million to
+$115 million +$20 million to +$80 million
CAPEX Around $0.75 billion Around $0.75 billion Around $0.75 billion

Changes to FY11 to FY13 EBITDA guidance reflect, amongst other things:

- TSO/RBI regulatory decisions as previously advised on 16 March 2010
- A softening revenue outlook due to:
- Lower mobile revenue growth
- Price pressures in voice and data markets
- Flow on impacts of the economic downturn
- Management initiatives to drive harder on cost out programmes outlined in May 2009

Telecom expects Capital Expenditure to reduce from $1.1 to $1.2 billion in FY10 to $1.0 to $1.1 billion in FY11. This guidance has not previously been provided.

Update on Regulation

“We are highly focused on how we position Telecom for a UFB world, and the implications for this on Telecom’s regulatory undertakings which are designed for a copper, not fibre world” said Paul Reynolds, Telecom CEO.

“We are open to working with the government on a full range of approaches to its UFB initiative. Our focus is on delivering the best result for Telecom shareholders and New Zealanders.

bung5

15-04-2010, 01:34 PM

So if I get a download of 21mps I'm not really getting that?

Sure if you all your internet activity is in NZ...

bung5

15-04-2010, 01:42 PM

Quoting Telecom from their release just now:
Changes to FY11 to FY13 EBITDA guidance reflect, amongst other things:

"- TSO/RBI regulatory decisions as previously advised on 16 March 2010
- A softening revenue outlook due to:
- Lower mobile revenue growth
- Price pressures in voice and data markets
- Flow on impacts of the economic downturn
- Management initiatives to drive harder on cost out programmes
outlined in May 2009 "

hmmm are you going to defend that?

minimoke

15-04-2010, 01:45 PM

Sure if you all your internet activity is in NZ...So if all my activity is in NZ then the Govts UFB is an excellent idea. So I take it the investment isn't going to do much to improve my overseas server experience. So the bottleneck isn't going to be in NZ its going to be at our borders. In which case in a few years we won't be talking about the last mile; we'll be talking about submarine cables.

Jay

15-04-2010, 02:17 PM

So if all my activity is in NZ then the Govts UFB is an excellent idea. So I take it the investment isn't going to do much to improve my overseas server experience. So the bottleneck isn't going to be in NZ its going to be at our borders. In which case in a few years we won't be talking about the last mile; we'll be talking about submarine cables.

That's my understanding MM
hence the cable thingy Rod J was talking about is an excellent idea IMO

bung5

15-04-2010, 02:26 PM

So if all my activity is in NZ then the Govts UFB is an excellent idea. So I take it the investment isn't going to do much to improve my overseas server experience. So the bottleneck isn't going to be in NZ its going to be at our borders. In which case in a few years we won't be talking about the last mile; we'll be talking about submarine cables.

you arguing this does not take away the fact that telecom will loose revenue regardless if it is a good idea or not.
Makes more of a buisness case for second pacific/transman cable to compete with telecom as well.

minimoke

15-04-2010, 02:48 PM

you arguing this does not take away the fact that telecom will loose revenue regardless if it is a good idea or not.
Makes more of a buisness case for second pacific/transman cable to compete with telecom as well.
I'd have to agree. I'm not advocating that TEL is a buy. Nor do I think that investment in UFB is going to be a silver bullet - either for TEL, the Govt or the web surfing home user. I do think NZ is a very small population with difficult terrain and a population with expectations above our ability to financially sustain them. More thought needs to be given to telecoms to get max value from such an infrastructural investment. Is $1.5b really going to get a great return for taxpayers. Or should someone like TEL be left to lay the whole infrasture in a monopoly with mitigation builyt in for that monolpty situation. Its all a bit moot at teh moment but either way TEL simply can't contuinue to generate the net revenues it has had in the past.

James.Anderson

15-04-2010, 04:48 PM

Reuters is say SELL!!!!

bung5

15-04-2010, 05:01 PM

Reuters is say SELL!!!!

That couldn't of been a hard decision. Anyone on this thread willing to back telecom?

troyvdh

15-04-2010, 05:40 PM

I cant really explain it...but whats happening to TEL....is kinda proof that at the end of the day...you can only fool people for so long...that screwing the customer...because of a dominant position...will ultimately determine your future...when others come to play....has this been a long time coming.....and SO predictable.....kind of comforting really....

Phaedrus

15-04-2010, 07:45 PM

http://i602.photobucket.com/albums/tt102/PhaedrusPB/TEL415.gif

..... and the market taketh away.

There is a lesson there somewhere.

peat

15-04-2010, 08:10 PM

weird how it collapsed 50% and then 78.6 % eh?

winner69

15-04-2010, 08:30 PM

"Our focus is on delivering the best result for Telecom shareholders and New Zealanders." says Reynolds today ..... doing one won't do it for the other methinks

bung5

15-04-2010, 08:37 PM

"Our focus is on delivering the best result for Telecom shareholders and New Zealanders." says Reynolds today ..... doing one won't do it for the other methinks

They will try and do worse for both

minimoke

16-04-2010, 08:01 AM

"Our focus is on delivering the best result for Telecom shareholders and New Zealanders." says Reynolds today ..... doing one won't do it for the other methinks
Totally agree - and this might help explain why they are going down the toilet. TEL need to look after their customers first. If they do that then they'll be looking after their shareholders. If you're not a customer or a shhareholder then TEL has no business having any concerns about you.

bung5

16-04-2010, 09:00 AM

I'm liking the sound of splitting the company into two . One of them could be a great investment

Dr_Who

16-04-2010, 09:13 AM

I'm liking the sound of splitting the company into two . One of them could be a great investment

Flectchers did that back in the 80s. Only one flectcher company left standing today, FBU. What TEL needs is a good leader with forward vision, not reactive .101 strategy straight from the university text books.

POSSUM THE CAT

16-04-2010, 10:24 AM

I have been anticipating that they would eventually have to seperate into two companies for the last three years. The sooner the better.

Arbitrage

16-04-2010, 10:45 AM

bung5

16-04-2010, 10:47 AM

Why is it that CEO's want to cut costs (in this case staff) to add value for shareholders? A true leader would look to increasing sales, improving margins, looking for new products etc. Telecom seems to have lost its way.

You can't expect telecom to increase revenue thats crazy... their revenue is going down and there is not much they can do about that in the short term

ananda77

16-04-2010, 10:51 AM

The problem is my good Dr. is that are are no textbooks for this ... its all too new and the world is literally littered with failed telco who have tried and failed to understand the new paridyms

Hi Belgarion,

...you are a Pro in this business so please, what are the new paradigms the telecoms are faced with and what in your opinion are real solutions for established players like Telecom NZ

-maybe you should open a thread for that -will be extremely successful-

Kind Regards

Enumerate

16-04-2010, 12:21 PM

NZ is indeed becoming a joke. No wonder the Aussie think NZ's telco environment is the biggest joke!

As if the Aussie Next Generation Network isn't an even bigger joke.

Dr_Who

16-04-2010, 12:52 PM

You will find Telstra is having the same problems as TEL in NZ.

minimoke

16-04-2010, 01:31 PM

Link for those who don't understand the VDSL ... suggest those talking copper have read .
But can't we potentially run VDSl to a house now. Most homes have a couple of lines going in now with only one set used for Phone / Internet.

Agree with your comments. I'm blowed if I can see why the govt wants to spend taxpayer money (and a hell of a lot of it) so we get to watch HD TV (despite Freeviews free-to-air efforts) through an ISP that has to charge us for their part of the lines and for teh MB traffic. Anyone who thinks getting fibre off the footpath and to the door for free is mad - thats gong to be another $1,000 per household: either cash up front or through subscriptions.

whatsup

16-04-2010, 04:39 PM

Despite the current bad TEL news the s p hasnt reached its recent lows---- whats the "market " telling us ?

Deev8

16-04-2010, 06:15 PM

... its all too new and the world is literally littered with failed telco who have tried and failed to understand the new paridyms
Most of them couldn't even spell the word :)

troyvdh

16-04-2010, 06:22 PM

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

peat

16-04-2010, 07:25 PM

Most of them couldn't even spell the word :)

i lol'd!

I'm not that keen about govt money continually providing society with the latest internet technology at taxpayer cost and risk, BUT what if the spinoffs from someone taking a slightly earlier , broader adoption of the technology were such that it paid overall for society to implement it now - even if the short-term commercial perpsective was less clear.
Essentially governments can take a longer term approach and accept more risk along the way. They can stuff up too of course but if we look at things like NZgovt buying Air NZ or back further the BNZ , and how that worked out , and in the US the Resolution Corp and recently the AIG buyouts et al, theres a history of governments having the strength to be a cornerstone shareholder of a company till it comes right again, or in this case it can be an infrastructure investor where returns are low and over a long term.
The really long term view can benefit a society especially in conjunction with a new pair o' dimes.

bung5

17-04-2010, 12:42 AM

email from the inside.... from CEO

I’ve just come out of a meeting with the Board and the information I’m about to share has just been released to the New Zealand and Australian stock exchanges. You may also be aware we’ve been in a trading halt in New Zealand for the past two hours.

We have to follow by the stock market rules of advising the market first of any announcements which will affect our profit.

Today, we’ve revised our financial guidance for FY11-FY13 to the market. This year’s guidance is unchanged. We’ve said our earnings over the three years of FY11-13 are likely to be lower than we had previously expected.

This announcement comes off the back of a difficult financial environment. I’ll go on to talk about this in more detail, but first up I want to let you know that we’re going to need to cut some jobs. Let me explain why:

We’ve achieved a lot over the past year, but the reality is our revenue outlook is weaker than previously expected. We've been impacted by a number of things:

* Firstly, the economic downturn and the long-term impact this will have on our business.
* The regulatory environment, including the finalising of the Government decision on TSO and rural broadband.
* Slower than predicted growth in mobile revenues. The financial impact of XT outages hasn’t helped this, although XT numbers continue to grow, albeit slower than anticipated.

We are not alone; the industry is changing and all incumbent telcos are facing the same pressure – albeit we are probably one of the most government-regulated telcos in the world now, which creates further pressure. And the UFB (Ultra Fast Broadband) initiative will profoundly change the shape of the industry in New Zealand – regardless of the outcome – and that creates long term uncertainty.

As a result, our strategy is to focus on the next 12 months and make sure we deliver to our shareholders while not losing sight of our customers and, most importantly you, our people, through what will be challenging times.

Our plans for the business over the next year will concentrate on these three key areas:

* Retaining customers
* Reducing costs
* Simplifying our business

We will need fewer people outside of the customer facing and operational areas, or in areas where people are focussed on delivering value in the near term.
So we’re looking at, as a first step, removing an initial 200 management jobs. (AAPT is unaffected).

Each of the exec has been tasked with looking at how they can take a number of these roles out of the business. Indeed, some of this is already taking place through restructures happening in some business units. Your leaders will be talking to you directly about what this means in each of the business/management units.

I’m committed to running this process as fairly and openly as possible and I will make sure this is well co-ordinated right across the group.

As I have in the past, I will keep being upfront and honest with you about what’s happening in the business, even if it’s not the news you want to hear. I feel I owe you that.

We’ll be briefing the media and market analysts on all this soon, too, and I’ll keep you updated on Pulse.

I know these kind of changes can be unsettling and distracting, but I know you will continue to do what you do best, and that is looking after our customers, day in and day out.

Paul

COLIN

17-04-2010, 01:47 AM

"Probably one of the most Government-regulated telco's in the world, now" says it all. And the public keep clamouring for more! My good friend Belgarion may not be too far out, in making the link to the communist world. The writing was on the wall, years ago, and yet a number of people on this forum kept trying to convince us that TEL was a good place to invest!

Snoopy

19-04-2010, 09:58 PM

That couldn't of been a hard decision. Anyone on this thread willing to back telecom?

Reuters say 'sell'? You mean the news agency that has no ability to analyze stocks and shares?

Telecom has certainly had a bad year. Fortunately investment performance depends on what happens in the future, not the past. ROE still looks O.K. TEL aren't investing more cashflow than they have so the whole business, while spending big, is being run financially prudently. Extra money is in the bank and available thanks to the YPG sale. Reynolds has now completed half the restructuring job - he'll be gone in a couple of years.

I am accumulating Telecom again. We can forget a return to the glory days. But the investment case looks pretty attractive to me at $2.17.

SNOOPY

bung5

19-04-2010, 10:16 PM

Reuters say 'sell'? You mean the news agency that has no ability to analyze stocks and shares?

Telecom has certainly had a bad year. Fortunately investment performance depends on what happens in the future, not the past. ROE still looks O.K. TEL aren't investing more cashflow than they have so the whole business, while spending big, is being run financially prudently. Extra money is in the bank and available thanks to the YPG sale. Reynolds has now completed half the restructuring job - he'll be gone in a couple of years.

I am accumulating Telecom again. We can forget a return to the glory days. But the investment case looks pretty attractive to me at $2.17.

SNOOPY

Snoopy I can not understand where you think Telecom is going maintain profits let alone increase profits. that 24c dividend is not sustainable. When that dividend drops so is the share price.

bung5

20-04-2010, 08:36 AM

bung5, TEL is pretty well analysed to death by the big players so expect the analysts to have run their slide rules over the numbers and concluded that even with a fall in yield, the current yeild still makes TEL attractive @ 2.17. i.e. the market is generally forward looking so certainties are factored in today price.

You seem to forget the 1000's of mum and dad investors and other fixed income investors ....

Brian

20-04-2010, 10:06 AM

I think we should hang in there and wait for the split [if it happens?] You have probably noticed that a small council run b.b setup has gone broke; and 2 degrees is howling foul. Well that,s the way it will be for those small telco,s who have no strength behind them. The rule of any business is don,t be undercapitalised. Most interesting is the loss of jobs being created as telcos cut costs to counter govt decrees. The ride will probably get rough for a while ,but once again i am hanging in.The big boys will win in the finish[ and i don,t mean govt.]

bung5

20-04-2010, 10:13 AM

I think even telecoms estimates of profit downgrades are optomistic. Cheap VOIP and more competition is going to have a greater impact on their revenue. Seeing as most of their revenue comes from telephony right?
Don't see them increasing their market share to much more in BB and mobile. Gen-i on the other hand looks set for great growth.

Snoopy

20-04-2010, 02:26 PM

You seem to forget the 1000's of mum and dad investors and other fixed income investors ....

Bung, I am assuming the annual dividend will be cut to 20c. However I am also assuming, over time, imputation credits will be restored. That will boost the gross dividend yield by 30%. The net effect is almost no change to the after tax dividend yield from today, even though after tax profits will plunge. Why would Mum and Dad investors sell out from a gross dividend yield of 10% to get a much lower dividend yield from other shares, or term deposits?

I am also assuming no positive benefit to Telecom from the government broadband to the home roll out, no recovery in mobile revenues overall and also that Paul Reynolds will be kidnapped and held in a cellar for 18months by a disgruntled marginalised ISP player. O.K., perhaps I haven't assumed that last one, but I think just about everything else has happened to Telecom.

Compared to other investments on the NZX, I think the upside potential is significant and the further downside potential is small. Recovery of XT, sell off of AAPT with another capital return, a more favourable outcome regarding the government roll out of fibre to the home than expected. I could go on and on, but hopefully you get the point. For your information Telecom was offering a cheap skype rivalling deal on toll calls about three years ago. So your picture of them as a lumbering incumbant, not at all up with the play is plain wrong.

Incidentally I also fear you may be wrong about Gen-i. Will they be able to replace the revenue for the expiring Commonwealth Bank contract?

Nevertheless, to me Telecom looks like the standout income investment on the NZX today.

SNOOPY

discl: accumulating TEL

macduffy

20-04-2010, 02:39 PM

sell off of AAPT with another capital return,

Hi Snoopy.

Would you care to hazard a guess on who might be interested in AAPT and how much it might fetch?

I'm not sure anyone would be very keen nor that the consideration would amount to much in terms of a possible capital return.

Disc: Holding a small parcel.

peat

20-04-2010, 05:54 PM

http://www.businessspectator.com.au/bs.nsf/fmISBlogHome?OpenForm&is=Non-Industry&blog=Communication Breakdown

bung5

20-04-2010, 09:03 PM

Bung, I am assuming the annual dividend will be cut to 20c. However I am also assuming, over time, imputation credits will be restored.

discl: accumulating TEL

It is going to be cut a lot more than that over the next 3 years. However I think anything can happen between then and now including a seperation. Telecom could be a good buy at some stage .

upside_umop

20-04-2010, 10:25 PM

Snoopy, did you see that Bruce Shepherd is now on the bandwagon for why we, NZ, a long skinny country with only 4 million people has two networks? He then refers to govt ownership.

I also see that the federal govt in australia is looking to buy back telstra's network...or thats a headline i caught a glimpse of while at work the other day.

NZ should just do the same. It should have set up its own cell phone network too...but probably too late for that considering they've enticed others into the market.

Gee, I'm starting to sound like a lefty.

Hoop

20-04-2010, 10:38 PM

"TV on demand" was started on the PS3 this morning..watched a bit on standard definition on my 52 in TV..no glitches or blocky pixels..looked great ..also you can watch it on HD. No caps rate if you are with Orcon...

Edit... Snap now as well.

With 105,000 Playstation 3 in NZ ..all the PS3 with internet link will have this free service automatically added to their icon display....

How long will it take before a big internet provider jumps into this no data caps rate area to preserve their customer base...... "TV On demand" is just the start, methinks.

TiVo looking more overpriced by the day now.

Enumerate

24-04-2010, 06:05 PM

Snoopy, did you see that Bruce Shepherd is now on the bandwagon for why we, NZ, a long skinny country with only 4 million people has two networks? He then refers to govt ownership.

Shepherd has this to say:

Over the last five years the NZ governments have systematically dismembered Telecom and tied it up in layer upon layer of targeted regulation. This has now got the company into a position where it can no longer afford to maintain its network on any terms that make economic sense.

By way of spooky aligned opinion, Chris Lee has the following to say:

http://www.chrislee.co.nz/index.php?page=taking-stock

The continuing collapse of Telecom’s share price – the direct result of duplicitous political intervention (selling a company under false pretences) – brings the losses to those people owning shares in Telecom over the last four years, to the grand total of $5 billion.

Say it again. Five billion have been lost, in the fading value of those shares, in just one company.

By my calculations, the total losses of the failed finance company sector will be around $3 billion.

At least Chris Lee is content with his observations on the government fostered destruction in value. Bruce Shepherd goes on to define a fanciful set of "deals to be done". Good one Bruce, or should I say "First Peoples Commissar Shepherd".

The absolute irony of the situation is that this woeful government policy is brought to you by the Ministry of Economic Development (yes, they use the word "development") Energy and Communications Branch.

The Energy and Communications branch (ECB) leads the Ministry's strategic priority of improving the quality and reliability of key infrastructural services.

The ICT Regulatory group, within this unit has the following policy mandate:

This group provides policy advice on the regulatory environment for the IT, telecommunications and postal sectors. This includes the efficient operation of the new telecommunications regulatory regime, provision of telecommunications service obligations such as the Kiwi Share, management of international obligations, and efficient operation of the postal market.

What these policy mandarins do not understand is that if you take $5billion off the table - due directly to the application of clumsy policy - the only entity you will find willing to invest further is the government, itself.

We will return to the days in which the national telecommunications infrastructure is supported by 50,000 government employees - some of whom work in the Telecom joinery shop making desks and fittings - and the Auckland network falls over every Christmas due to excessive demand (or it that chronic underinvestment misdirected to obsolete technologies).

If you want to see how it will play out ... read the following book

http://atlasshrugged.com/

(Written in 1957 it is about rail networks - in 2010, telecommunications networks are more appropriate for the technology - the forces within society, however, remain invariant with time)

Jay

25-04-2010, 02:13 PM

For more on Ayn Rand, listen to the album or at least the (title) track 2112 by Rush

Their drummer and main lyricist, Neil Peart, is/was a fan of the basic philosophies of her, basing a number of their earlier work/songs on her writings
as is my understanding.

Great band by the way.

macduffy

26-04-2010, 07:59 AM

Hi Snoopy.

Would you care to hazard a guess on who might be interested in AAPT and how much it might fetch?

I'm not sure anyone would be very keen nor that the consideration would amount to much in terms of a possible capital return.

Disc: Holding a small parcel.

Today's article in the DomPost suggests that AAPT might fetch around $500m.

About 26c per share although I would think that TEL would use the proceeds to reduce debt.

Balance

26-04-2010, 08:16 AM

Today's article in the DomPost suggests that AAPT might fetch around $500m.

About 26c per share.

Great example of how Telecom was run under Rod Deane - turning $2.5 billion into $500m.

Imagine if the $2.5 billion had been invested into upgrading Telecom's infrastructure in NZ? NZ would have a world class telecommunication system and Telecom would have an unassailable business.

Meanwhile, the sale of AAPT gets mentioned every second month. This one in Dec 2008 :

http://www.stuff.co.nz/technology/it-telcos/743661

winner69

26-04-2010, 10:06 AM

Sale of AAPT would at least keep those juicy dividends going for a a bit longer

As Balanc says a great buy that was

macduffy

26-04-2010, 12:46 PM

Sale of AAPT would at least keep those juicy dividends going for a a bit longer

I wonder about that, winner.

The sale won't realise a profit, assuming that TEL havn't already written the value of AAPT down below whatever it can be sold for.

Certainly, there will be a cashflow benefit but the odds are that TEL will either need it for ongoing investment or use it to pay down debt.

But we're getting ahead of ourselves. TEL first have to find a buyer and make a sale!

Oiler

26-04-2010, 06:40 PM

Jay

26-04-2010, 07:47 PM

Jay you are right ..Neil Peart was/is a big fan of Ayn Rand and yes a GREAT band. Are we showing our age ? :cool:

Not sure :-) I'm on the right side of 50 wrong side of 40 - apologies if i have confused you with someone else!
Think you are older than me Oiler, having met you once and the Auckland meet a year or so back.
I got into them on my first OE to the Sates around the time of Permanent Waves, they were paying tracks on the radio from the album and now own all the albums and most concert DVD's and have read Atlas Shrugged and Anthem ( from which 2112 was based?)
Oops anyway a bit off topic in a way.

sharer

27-04-2010, 02:31 PM

... Oops anyway a bit off topic in a way.

But so much more soothing than reading the daily news about Telecom.

Today see an item about the Minister telling the CommCom to try again - presumably hinting at willingness to regulate the Mobile trade (& TEL income downwards again).
On the other hand, interesting to see over the weekend that TEL now has six RNCs running where XT was launched with only two - seemingly validating the early criticism that XT was launched with serious technical underinvestment, & no built in redundancy. Incompetence is always so expensive, but sadly more for the stakeholders rather than the overpaid dicks responsible for blundering. They won't be paying, but no surprises if they get overpaid some more for fixing it up ...

Snoopy

01-05-2010, 09:42 AM

Great example of how Telecom was run under Rod Deane - turning $2.5 billion into $500m.

How well have I done out of TEL? I have been a shareholder since the beginning, a long 19 years ago. However most of my purchases have been more recent. The median holding time for my holding is just 3.75 years. In those 3.75 years I have received a total of 118.4cps in dividends. A ‘buy and hold’ investor buying at that time would have paid $4.03 per share. My average purchase price is $4.25. So purchase timing, hasn’t been great.

My total return has been: (4.25)(i^3.75)=(2.18+1.18), where ‘i’ works out at 0.939. This represents a compounding loss of 6% per year.

Over that same time period the NZX50 has declined from 3450 to 3300. That represents a loss of:

3450(f^3.75)=3300, where ‘f’ works out as 0.988.

This represents a compounding loss of 0.3% per annum. My net loss relatiove to the NZX50 index is therefore -5.7% per year compounding and after tax.

SNOOPY

Snoopy

01-05-2010, 03:50 PM

How well have I done out of TEL? My net loss relatiove to the NZX50 index is therefore -5.7% per year compounding and after tax.

No-one ever talks about their negative results on this forum. So I wanted to include this example to offset the two extremely positive results I have obtained with RBD and TUA, two other steady dividend paying shares that I have accumulated using the same 'deep value' accumulation tehnique. The aim of the 'deep value accumulation' strategy is to buy into companies that will always be around when they are in some sort of trouble. Hopefully that means you can buy in at some kind of discount. The investment is then 'justified', until it recovers, by the very high dividend income that you earn while waiting.

So how do I justify this 'mistake'? I would argue there has been no mistake. The mistake would have been to put all of your money into Telecom assuming that it is obviously the best investment out there. Telecom has not let me down from the income perspective. But in this instance it seems that one bit of bad news has lead to another. Telecom is certainly at a low point.

Nevertheless I would argue the capacity for some sort of recovery is still there. That is why I have been buying recently. Not to 'recover my money' because from a portfolio perspective I haven't lost any. I am buying because I genuinely believe the odds are on things getting better from here. So, no I'm not expecting Telecom to ever get back to their glory days. But from my perspective putting money into Telecom today, on a projected PE of about 10, looks very favourable compared top the other investment options out there.

SNOOPY

bung5

01-05-2010, 05:01 PM

No-one ever talks about their negative results on this forum. So I wanted to include this example to offset the two extremely positive results I have obtained with RBD and TUA, two other steady dividend paying shares that I have accumulated using the same 'deep value' accumulation tehnique. The aim of the 'deep value accumulation' strategy is to buy into companies that will always be around when they are in some sort of trouble. Hopefully that means you can buy in at some kind of discount. The investment is then 'justified', until it recovers, by the very high dividend income that you earn while waiting.

So how do I justify this 'mistake'? I would argue there has been no mistake. The mistake would have been to put all of your money into Telecom assuming that it is obviously the best investment out there. Telecom has not let me down from the income perspective. But in this instance it seems that one bit of bad news has lead to another. Telecom is certainly at a low point.

Nevertheless I would argue the capacity for some sort of recovery is still there. That is why I have been buying recently. Not to 'recover my money' because from a portfolio perspective I haven't lost any. I am buying because I genuinely believe the odds are on things getting better from here. So, no I'm not expecting Telecom to ever get back to their glory days. But from my perspective putting money into Telecom today, on a projected PE of about 10, looks very favourable compared top the other investment options out there.

SNOOPY

If telecom can secure this national fibre inclusion then I think you would be right. If not then could be down hill

Snoopy

01-05-2010, 06:21 PM

If telecom can secure this national fibre inclusion then I think you would be right. If not then could be down hill

I don't think this is a yes/no question. Telecom will get the job of building and integrating the fibre outside of the main centres at least. Likewise they are almost certain to miss out on some of the build. In those areas the TEL legacy network will be up against the newcomer. In three years time we will know what a difference that makes.

SNOOPY

Grimy

01-05-2010, 07:20 PM

No-one ever talks about their negative results on this forum.
SNOOPY
I appreciate your posts. They are always interesting. And I would say my investment style is more like yours than that of some of your "opponents"-not the right description, but I couldn't spell the word I was thinking of!!
I have made plenty of shocking investments (guesses some would say).
Over the years I have lost all of my investment in Environ, ICP Bio and other companies that escape me after a couple of wines, and losses on a few finance companies too.
But overall, my total portfolio has tracked up reasonably well.
I would love to say I got it right everytime. But I haven't. Who has?
As long as the overall performance is heading in the right direction I can sleep. I may be kicking myself for some decisions, but that's life for the average Joe, or Grimy!

percy

01-05-2010, 08:17 PM

it use to be if you got 6 investments right out of 10 you would make money in the market.At one stage I was getting 9 out of 10.However the last couple of years have turned a lot of great companies into problem ones.I have shares in NPX and PGC ,lost heaps however it was money I would not have made unless I had invested in the market.Other companies like EBO have been steady.No one gets it right all the time,and I think we all are forever learning. I know I am.I thought of starting a tread on all the bad companies I have lost money on,but decided I would never
live it down.Like you some shockers.!!!

Hoop

02-05-2010, 12:33 PM

Micro-managed out of Telecom after 39 years and 4 months of faithful duty!!.

I personally know this person and mulled over whether to mention it on Sharetrader or anywhere else on the internet for that matter...but the time has come, as my conscience is nagging me to do the moral right thing.

The shareholders of Telecom and members of the public have a right to know.

For those who have the time or don't have a blind eye to these sorts of things Please read this blog from its very beginning thru to the latest entry.

I would interested to see the points of view from Telecom shareholders after they read this blog from its beginning to its end.

I will not add anything further to bias this post as I would like to see what other people think and if anybody has any suggestions.

Please click http://hwyop.blogspot.com/

Thanks
Hoop

RRR

02-05-2010, 06:40 PM

How well have I done out of TEL? I have been a shareholder since the beginning, a long 19 years ago. However most of my purchases have been more recent. The median holding time for my holding is just 3.75 years. In those 3.75 years I have received a total of 118.4cps in dividends. A ‘buy and hold’ investor buying at that time would have paid $4.03 per share. My average purchase price is $4.25. So purchase timing, hasn’t been great.

My total return has been: (4.25)(i^3.75)=(2.18+1.18), where ‘i’ works out at 0.939. This represents a compounding loss of 6% per year.

Over that same time period the NZX50 has declined from 3450 to 3300. That represents a loss of:

3450(f^3.75)=3300, where ‘f’ works out as 0.988.

This represents a compounding loss of 0.3% per annum. My net loss relatiove to the NZX50 index is therefore -5.7% per year compounding and after tax.

SNOOPY

Hi Snoopy

I bought some TEL shares in Nov, 2008 for $2.31(incl brokerage) and participated in the DRP since. The net dividends i received so far is about 21c(after tax, =$2.10) and hence still in the positive but by not much. I was tempted to buy more when the share price dropped on many occasions but I didn't. TEL is about 5% of my portfolio. GMT is more appealing to me for dividends at this stage than TEL. May be this is the time to buy?? But i will stay away for a while now.

Enumerate

02-05-2010, 08:53 PM

Reynolds needs to demonstrate that he is actually worth the megabuck salary he is paid.

There have been some encouraging signs - moving the Telecom corporate strategy functions to Auckland. In Wellington, Telecom has an arrogant culture based on the belief they understand information technology in business - reality is they do not have a clue. I would further add that every single senior Telecom technology person I have met has both the view that they understand the business IT market and they can design products for this market. They don't and they can't. Gen-i isn't helping.

Telecom is a follower of technology trends and is usually "a bob short and a day late". Their people have no strategic insight and are vendor captured "project managers". This is the culture of government - stay in Wellington, it will be your corporate culture.

What about the retail space? Do they understand their customer - do they have appropriate structures to support appropriate services. No, again - failure. Mobile/wireless - 2degrees offers better systems and support at a cheaper price. ISP services - isn't obvious to everyone that the painful separation of Telecom provisioning and Xtra provisioning is not working for customers. They are actually pretty good at PoTs - though here you are really dealing with the service quality determined by your patch provider. Look at the unfolding disaster the Tivo vs MySkyHDI retail push will become. Do Telecom think they can get anything other than a sound beating in the market. It reminds me of Ferret vs Trademe - another basic, basic mistake (Telecom effectively invited large retails to destroy brand value in the face of the Trademe challenge - smart retailers were moving in the completely opposite direction - a fact Telecom could not understand).

Since Theresa had a rush of blood to the head and bought AAPT for a fortune based on a single contract win with the State of Victoria - that has not gone anywhere (but down) since then. Skype has in this time created a virtual telco based on some smart codec technology around Internet services that went from nothing to worth more that the complete Telecom shooting match.

I believe that Telecom has built a very successful global, niche, voice wholesale business. They could replicate this success in the data domain by leveraging their Southern Cross cable capacity (classic Metcalfe's law). Success here hinges on realising that Telecom is a tiny player in the global telco space and can only succeed based on effective niche operations fuelled by agile deployment of services. You would be insane to try to do this in Wellington with the arrogance that comes from a small regional town that happens to be the political capital.

For God's sake how difficult is it to understand the government agenda with regard to investment in "broadband" network services. Of course the government mandarins do not have a clue what it means to build and maintain large scale, high capacity network infrastructure. In this case, it is easier to give them what they want - at a full price - rather than appear to subvert or deflect their plans. The negotiation position should be "full compliance" at a "full price" - not "partial compliance" and "evasion".

Reynolds should shift to Auckland - put the creative next generation service development, in Auckland. View Australia and New Zealand as the market for these new services with an eye on the global space for things that work well. Put a cadre of "economists" and "policy analysts" to deal with the government's political agenda, in Wellington. If government wants to steal your assets in the name of "the public good" - you need to carefully manage this impact - but none of this is the future of the telco market in NZ.

For example, Apple, with the iPhone have outmaneuvered the telco suppliers - left to the low margin end of the new mobile services with Apple scoring record profits for what is essentially a software usability design. After all, a mobile device is basically a digital certificate mediating access to simple network services. Which piece do you want to own - the low margin "utility" services or the high margin "application" services.

A Wellington centric Telecom will never understand the new realities. Telecom should consider itself a global supplier of niche application services. The design and implementation of these services relies a business dynamic that thrives at the "edge" of classical network services.

A Wellington centric infrastructure Telecom will thrive in Wellington. Administering the central NZ telecommunications infrastructure through management of "patch" supplier contracts is well within the sphere of competence. Of course it will cost too much (government administration), of course it will all take too long (government administration), of course it will never meet, exactly, what the market needs (government administration). But at least you don't have the bulk of your capital exposed to a game you can never win. If the collectivists want to steal your stuff - they will steal your stuff.

Paul - move to Auckland with your best and brightest. Auckland is a better place to understand and shape these new services. Theresa and Rod extracted maximum revenues from the network core infrastructure - this is no longer the cash cow it could have been because of the predictable regulatory backlash. It is often easier to push something downhill, to it's inevitable conclusion, than to push it up hill. Leave a cadre in Wellington to fight this rearguard action - it is of little strategic value - extract your asset capital from this mire and focus on the future.

buns

03-05-2010, 09:54 PM

Some pretty strong ideas there mate. However the whole argument falls over when your underlying point is totally wrong.

Paul has never lived in Wellington, he moved straight to Auckland where all but one of the exec live. Even if they were in Wellington, your argument is a tad far fetched stating any large business residing in that City restricts there thought just because they may have a few goverment departments down the road.

I'm pretty sure Xero were also founded in Wellington and have done not bad so far. I would hardly call those guys inept when it comes to technology and building ideas..

You raise valid points on Telecom's demise, but should Wellington is not to blame.

minimoke

04-05-2010, 09:22 AM

Micro-managed out of Telecom after 39 years and 4 months of faithful duty!!.

Hoop
The blog is a bit convoluted to get the main thrust but the bits I scanned over suggest:
An employee using the employers resources for his own personal benefit (using the companies email system to contact his own lawyer). This is wrong at two levels; 1 being he shouldn't use company property in such a way. 2 - its just plain dumb to have those kinds of communications going on in the work environment - so shows poor judgement on your mates part. Its arguable that the communications were privileged information (between a solicitor and his client) but the Privacy Act isn’t the way to resolve that issue.

Next was the ERA determination. Well that’s just dumb to. The Union should know who the employer is (its not hard to work out) and they should have advised your mate accordingly. If he chooses not to take their advice then that’s his problem. If the Union didn't give the advice it’s his problem for belonging to such a useless union.

I'm not sure what his actual grievance is. Looks like he wasn’t performing and his boss had to manage that poor performance. That is TELs right and shareholders should be pleased about that. It also looks like he and his employer mutually agreed to terminate his employment and a sum of cash was paid out. That’s a pragmatic thing to do and is what I'd expect TEL to do. That’s good for shareholders
Disc: I’d have to say I’m a bit biased against long term employees. After 39 years service I’d have thought he had was well past his used by date in terms of make a valuable contribution to TEL – that’s not to say he couldn’t take his skills elsewhere and add value to another company. But sometimes its better to vacate a job and let a new person come in who can bring different skills and ideas and make the job better and consequently make TEL more profitable.

troyvdh

19-05-2010, 05:44 PM

what is beginning to intrigue me is ...given the trajectory of this company....SP wise....is what the major shareholders are going to do...ie fund managers...because its my belief that some funds are mandated to hold a % of blah blah in the most capitalised companies....so called "blue chip"...however I must be a lttle reflective here as i am a holder of CEN....which aint that flash either....but hey ...do WE have hope...

the effect on some funds must be quite profound...

duncan macgregor

21-05-2010, 06:02 PM

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 I would now say now that the SP is below $2-00 the only prediction left to make is how long before $1-50 gets breached. You can only blame arrogance ,greed ,and utter stupidity for what is the down fall of what might have been a great company. To pay an individual seven million dollars a year in a down trending company is the height of utter wreckless stupidity. Macdunk

GTM 3442

22-05-2010, 08:06 AM

Now that the writing on the wall has been unveiled, which parts will be spun off, and which will be best for us, the investing community ?

Who'd put their hand up for a slice of gen-i ? Chorus ? SCC ? POTS ?

peat

22-05-2010, 08:40 AM

http://*************nz.blogspot.com/2010/05/telecom-nz-share-price-has-jumped-shark.html

the TEL share price has dipped below the magical 2 buck mark for the first time and it is all on for young and old. It has now "jumped the shark (http://en.wikipedia.org/wiki/Jumping_the_shark)".

2620

Enumerate

22-05-2010, 11:53 AM

A very insightful overview:

http://www.stuff.co.nz/business/industries/3726259/Telecom-ultrafast-strategy-revealed

I note that the Chorus PR campaign has already begun.

On your marks ... get set ....

We are now on the cusp of genuine investment and innovation in the ICT sector in NZ. Chorus will be the government controlled regulated monopoly. Based in Wellington it will have all the Wellington characteristics - slow moving, capital inefficient, poor service response, along with a greatly inflated view of their position and capability.

There will be a grand opportunity to "fill the gaps" and to innovate. However, there will be massive over investment and significant mis-direction of resources. For example, there are people who imagine that XERO is an example of a software as a service firm likely to thrive in the new environment - dreams, of course, remain free of charge.

GO ...

minimoke

24-05-2010, 02:53 PM

flyingfox

24-05-2010, 04:04 PM

I'm with big time, just signed two months, been overcharged $70 and spent about 3 hours in total to request credit, 3 empty promises were given and it's still on the lastest bill.
I'm totally shocked this is the market leader in NZ, what a shame...

peat

24-05-2010, 04:13 PM

Thumbs down to TEL. Another cockup on the old technology front!. Seems they can't cope with the traffic management aspects of their "Big Time" PLan so they are pulling it. And they are even inviting me to change providers!

the torrenters are always going to be more nimble that the monolithic telco minimoke. its not really that damming.
I was personally affected by this failure as I am on that plan and my trading apps kept getting disconnected (even though they use SFA network traffic)
I think they should just cut people off when they use over a large volume of data each month. clearly they're not going to make any money out of someone moving over 100gb a month on a fixed rate plan. I think the rules of the plan allow it.... so I'm kind of disappointed they cant find a way to allow non abusers to continue on an unlimited plan.

BUT as I say anecdotal stories are not business analysis.

minimoke

24-05-2010, 04:25 PM

clearly they're not going to make any money out of someone moving over 100gb a month on a fixed rate plan. I think the rules of the plan allow it.... so I'm kind of disappointed they cant find a way to allow non abusers to continue on an unlimited plan.
Agree. So why not send me an email that says "we value your phone, web hosting and BB business but unfortunatly the Big Time plan has changed with the limit at, say 100gb" rather than saying the plan has gone and telling me about disconnecting broadband. Well I'm not going to disconnect so its off looking for other providers now!

upside_umop

24-05-2010, 05:50 PM

Yeah, well done. Finally they're going to separate and we'll have it better around for everyone.

-Consumers
-Telecom
-Government

All I can is, its about time.

darksentinel

24-05-2010, 07:03 PM

Getting out of TEL earlier this year seems like the only smart investment choice I've made in the last six months (a period which has not been at all good for this company). It's a shame, it used to seem like a reasonably solid choice.
Hopefully the developments of the next few months will show some ups for the NZ telco situation.

GR8DAY

25-05-2010, 09:39 AM

......I see Telecom has now received a down-grade from S&P............can it get much worse for them. I wud love to get in and start buying but even at the "current" low I hesitate.

peat

25-05-2010, 09:43 AM

......I see Telecom has now received a down-grade from S&P............can it get much worse for them. I wud love to get in and start buying but even at the "current" low I hesitate.
thats not exactly correct
S+P have two parts to their ratings - the letter itself and an outlook as to whether that is stable (or not)
In this case the rating stays the same , the outlook changes.

Standard & Poor's rating service downgraded its long-term outlook for Telecom from stable to negative.
it affirmed its A long-term and A-1 short-term corporate credit ratings, analyst Paul Draffin said

GR8DAY

25-05-2010, 09:55 AM

...I stand corrected (sort of) PEAT, but still not GOOD news for Telecom

Phaedrus

25-05-2010, 11:11 AM

I wud love to get in and start buying but even at the "current" low I hesitate.Good lad. TEL is in a downtrend and buying downtrending stocks is not a good idea - right? Here's a radical idea for you though - if you really do want to buy TEL, why not wait for a "Buy" signal?

The chart below shows a few standard indicators (using default values) that continue to keep you out of TEL while the current downtrend plows on. Note that only very recently have the RSI and CMO oscillators rated TEL as being "oversold". A "buy" signal is triggered when these oscillators rise above the "oversold" threshold.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/TEL525.gif

The TEL story is a long, sad, sorry saga that has cost "value investors" dearly. Those with an interest in learning from the mistakes of others might like to view this (http://www.sharetrader.co.nz/showthread.php?3593-TEL-(Telecom-NZ-Ltd)&p=252922#post252922) chart.

winner69

25-05-2010, 11:37 AM

Man on the radio this morning said Mums and Dads have lost more on their Telecom shares than all the financial company disasters added up .... that is sad state of affairs

But suppose they still have their TEL shares ..... ie haven;t had to things like converting their Hangover debentures to ALF shares

PhaedrusFollower

25-05-2010, 11:48 AM

I just bought in at $1.98.... Then I thought I would come and have a look what ST thinks of that decision....sorry Phaedrus....it was a non technically analysed buy. I think Telecom is worth more than $2 a share, and if by some bizarre leap of faith they succeed in getting some of the goverment's ultra fast broadband program business...they may well survive...in some form. Imagine what the atmosphere is like in Paul Reynolds office....

GR8DAY

25-05-2010, 11:51 AM

OK PHAEDRUS I WILL KEEP BEING PATIENT FOR THE TIME BEING!..........but at some point Im gonna start accumulating, this money is burning a hole in my pocket...... for the kids if nothing else. (dangerous I know). My brother-in-law who was with Telecom for 30yrs paid around 7buks for his and was gonna top up again at 9buks......they still have them......ouch.

winner69

25-05-2010, 12:36 PM

And a taxi driver said ...

Frankly, the man on the rasio must be daft. All those divies? And still worse than finance companies? I find that very hard to believe.

At the end of 2006 TEL market cap was in excess of $9 billion ..... today $3.7 billion

Thats a lot of billions of shareholder wealth gone .... even if you do allow for divies and capital repayments

And Mums and Dads have prob endured the pain along with the instos stuck with having to hold them

GR8DAY

25-05-2010, 12:40 PM

......and still they head south, another 3% vanished into thin air! With all the uncertainty surrounding Tel this routing may well continue for sometime me thinks..........but then I wud say that wudnt I! (come to mamma)

winner69

25-05-2010, 12:48 PM

Most mums and dads would have got the shares at issue and just sat on them. As would many instos.

they prob dead by now belg

and how many have
invested' in TEL because it was touted as the best call account around

COLIN

25-05-2010, 10:04 PM

No-one ever talks about their negative results on this forum. So I wanted to include this example to offset the two extremely positive results I have obtained with RBD and TUA, two other steady dividend paying shares that I have accumulated using the same 'deep value' accumulation tehnique. The aim of the 'deep value accumulation' strategy is to buy into companies that will always be around when they are in some sort of trouble. Hopefully that means you can buy in at some kind of discount. The investment is then 'justified', until it recovers, by the very high dividend income that you earn while waiting.

So how do I justify this 'mistake'? I would argue there has been no mistake. The mistake would have been to put all of your money into Telecom assuming that it is obviously the best investment out there. Telecom has not let me down from the income perspective. But in this instance it seems that one bit of bad news has lead to another. Telecom is certainly at a low point.

Nevertheless I would argue the capacity for some sort of recovery is still there. That is why I have been buying recently. Not to 'recover my money' because from a portfolio perspective I haven't lost any. I am buying because I genuinely believe the odds are on things getting better from here. So, no I'm not expecting Telecom to ever get back to their glory days. But from my perspective putting money into Telecom today, on a projected PE of about 10, looks very favourable compared top the other investment options out there.

SNOOPY

Snoopy, old chap, you're incorrigible!

I haven't looked at this thread for ages but it doesn't appear that Phaedrus has commented on your recent posts - he's probably still shaking his head in disbelief! TEL will no doubt survive, in some form or other, but why on earth would you not wait until the decay is arrested before buying. Down to $1.85 tonight.

I don't think Duncan McGregor's prophecy about a sub-$2 share price was believed by many at the time, but he has been vindicated.

Romer

25-05-2010, 10:43 PM

Hmmm. How long before TEL is out of the NZX10 - - - the NZX50?!? - - - - I jest - - - I think.

GR8DAY

26-05-2010, 10:00 AM

.maybe not that long ROMER........I pulled my buy bid yesterday for 20000 at 1.85.........I doubt that I will regret it!

winner69

26-05-2010, 10:04 AM

.maybe not that long ROMER........I pulled my buy bid yesterday for 20000 at 1.85.........I doubt that I will regret it!

Methinks $1,85 would have been a good buy for a short term trade .... maybe not for the long term though

GR8DAY

26-05-2010, 10:10 AM

yep looks that way winner.........but oh my golly gosh how things can quickly turn.......might regret it, happy to wait and see what unfolds over the next day or three.......personally I think Telecom is still pointing south until all this uncertainty is resolved.....but then what do I know?

duncan macgregor

26-05-2010, 02:09 PM

And a taxi driver said ...

Frankly, the man on the rasio must be daft. All those divies? And still worse than finance companies? I find that very hard to believe. BELG my old mate you missunderstand the meaning of lost more. The total ammount lost on TEL from its high is greater than the total ammount lost in finance companies. Lost opportunity watching your capital shrinking bleating about dividends to cover up your mistake. Simple solution only hold shares in uptrends or buy property which leaves the share market for dead. TEL are still in a sharp downtrend why get in the pooh by trying to bottom pick wait until PHAEDRUS lets you know when it starts to show buy signals if ever. The likely uptrend is when they start selling the poles for firewood and the wires for copper scrap but then I suppose seven million a year is to much to pay a firewood and scap merchant in a yearly salary from the trough. Macdunk

Enumerate

28-05-2010, 08:14 AM

Looks like Telecom is embracing the concept of full separation:

Telecom could be spilt into two businesses by August next year, chief executive Paul Reynolds told analysts at a briefing in Sydney yesterday.

Each of these businesses would be of a separate and distinct nature. The Chorus "lines" business would be a Wellington business - existing in the netherworld of political grace and favour, hopelessly inefficient/overcapitalised but sustained as a natural monopoly by it's political connections. The "retail" arm would be an Auckland business - customer focused and service aligned, agile and responsive to changing market/technology developments, innovative and investing - parts of the organisation may actually compete with other parts:

"We really don't know how the future is going to unfold – is the upside going to be in Chorus or is it going to be in Telecom?"

Free whatever is left of the creative side of Telecom. If the collectivists in Wellington want to loot your stuff - shove it down their throat and let them choke:

Mr Reynolds appeared more focused on lifting the regulatory burden on Telecom's wholesale and retail arms than clinging to part of the network business.

Telecom could be the ultimate venture capitalist for the development of global IT services. Without the lines ... why stay as a New Zealand business. Find global niches ... resource development ideas from the global ideas gene pool ... innovate and prosper!

peat

28-05-2010, 09:12 AM

Dr_Who

28-05-2010, 09:20 AM

hey Enumerate
It thought it pretty funny in the article I read where Paul Reynolds said "Which of the two would be the better business? Who knows? "

Gee here's me thinking a CEO would have at least a small clue about that.

I ve been saying he is not worth the money TEL is paying him since his appointment, that is why I dont have any TEL shares.

buns

28-05-2010, 09:51 AM

Gee Enumerate you really need to get of this horse, and stop blindsiding Wellington.

I’m not going to go on about it, but what is your argument for Wellington businesses having more political connections, inefficient, over capitalised?? Do you hold the same thought for every capital city? London? The place has to be one of the most creative, and innovate cities in the country. A couple of very recent articles..

http://www.stuff.co.nz/business/industries/economy/3729384/More-Wellington-firms-plan-to-hire-and-invest
http://www.stuff.co.nz/dominion-post/local/3643316/How-Wellington-vodka-conquered-the-world

You tripped your self up before when thinking Telecom was wholly a Wellington business, now you have been corrected and know it’s largely a Auckland one you think it has a creative side?

Telecom business units competing with each other?? The company is already functionally separated, the BU’s purchase off Chorus/Wholesale on an equivalent basis, just like other telco’s/ISP’s would. I’m sure you understand this; you may have noticed the $6b of value flushed down the drain since separation was announced? So must be saying Gen-I and Retail will start fighting it out with each other? Completely different businesses..

These people picking on Paul’s quotes, just need to put themselves in his boots. The UFB battle is in progress! Of course he doesn’t have exact answers. He has stated they have started to investigate the possibility of structural separation, once they know the incremental value in this; he may be able to answer these questions. The business case here is where does Telecom shareholders get most value – From the current structure, rolling out its own fibre or using copper to compete against Crown Fibre OR Splitting Chorus, working with the govt and laying out Fibre.

The other thing going here, is whether the MED can approve the change in there current undertakings, allowing Telecom to quit BBA and other copper based rollouts. You have to think, if they get relief on these. Telecom is defiantly separating. But, until these kinds of things are agreered on, Paul has no reason to give investors any clarity.

Anyway, if you want to dig into Paul, hit him on things he has direct control over. Growth in Gen-I and Retail, the 2 business’s which are suppose to turn Telecom around (Both fully based in Auckland).. Following yesterdays investor day, I can’t see it..

peat

28-05-2010, 10:44 AM

Telecom is defiantly separating. But, until these kinds of things are agreered on, Paul has no reason to give investors any clarity.

do you mean definitely or defiantly ? either is possible ;+)
and yes I agree that it may not be in his interests to define which of them will be the better business even if he does know. that did cross my mind in criticizing his statement. The trouble is it gives out the impression he doesnt have the knowledge he should have. If FUD is the deliberate strategy best to avoid talking about it too much

macduffy

28-05-2010, 10:51 AM

Yes, I can't blame Paul R for not wanting to speculate on which part of a possible split of TEL would be the better business.

Apart from not wanting to stoke the fires for the case for splitting, coming out in favour of one side would effectively condemn the other to a "confirmed dog" status.

Jaa

28-05-2010, 12:27 PM

Good on ya Buns, Enumerate has also been pulling my chain with the ideological anti-Wellington ranting.

The simple fact is Telecom started going downhill when it started moving operations from Wellington to Auckland. I have a saying that the talking is done in Auckland and the real work in Wellington. This is true across most of the banks, insurance companies, Telecom and many others. The talkers, marketing, sales, PR are in Auckland, Wellington has the engineers, IT, some finance and operations.

I know an actuary who did a financial analysis of the cost of doing business between Auckland and Wellington. It wasn't even close, mainly because the average employment length in Auckland in this industry was 2yrs compared to 8yrs in Wellington. This loyalty also extends to NZ with Wellington people having much more of a NZ Inc outlook.

Still don't believe me, heres a list of startup companies founded in Wellington in the last decade, you may have heard of them.

Banking: KiwiBank, RaboPlus

Telco: 2Degrees, FX Networks

Internet: Trademe, Xero

Other: Icebreaker, 42 Below

If you want to see waste go and talk to anyone involved at that great Auckland based but overseas owned company, Vodafone.

buns

28-05-2010, 01:45 PM

I ve been saying he is not worth the money TEL is paying him since his appointment, that is why I dont have any TEL shares.

The Paul Salary discussion is one I’ve stayed out of, because they needed someone with experience of function separation. As the CE of Wholesale at BT, he was a part of their separation. Think of his salary as another $5m ontop of their cost to functionally separate. Obviously no NZ’r had this experience, so they needed someone overseas/Paul and had to pay overseas rates. When you think of the $100’s of millions Telecom has spent separating, his $5 looks piddly. They could have spent $2m on some local who had never done it before and even a 5% waste in CAPEX on separating would have cost more than Paul and his salary.

However!! Now structural separation looks the go, Paul’s experience isn’t really needed! Shareholders can argue that Paul has destroyed the company spending bucket loads on functional separation which is all going to be wasted if they do it structurally ( currently trying to limit the waste through changes to current separation agreements stated in my early post). Two things to think about here though, 1 – the shareholders voted for Paul’s appointment, and more importantly 2 – Functional separation came about from the old exec (T Gattung) not settling on anything with the govt earlier.

Enumerate

28-05-2010, 01:56 PM

I know the money men behind 2Degrees and FX Networks ... they would be mortified to be claimed by Wellington.

Xero and 42 Below I put in the same basket - disastrous long term investments - unless you paid cents per share - like the founders

Consider, for a moment, the Auckland University business incubator - the ICEHOUSE - named in Forbes.com's Top 10 Technology Incubators of the World - also the only one outside of the US.

Before you dismiss Voda - you should probably understand that it is a global centre for innovation for the UK parent.

We should probably start a separate thread: How about "Absolutely, Miserably, WELLINGTON"; or "It ain't Super unless it's AUCKLAND"

macduffy

28-05-2010, 02:07 PM

Good idea!

Let's stick to TEL on this thread.

Vtrader

15-06-2010, 08:55 PM

Any anglers out there?
Is Paul fishing, or acting?
Seems that recent TV advertising coincides with upwards SP, are we fickle enough to believe a turnaround when commercial propoganda is presented? or is this 'trading the news'?
As always, time is the toughest negotiator of all, and from a position of hindsight we will all know what sort of angler Paul really is.
For sports sake I hope he catches a big one, and that he knows what to do once he has hooked it.
V.
disc: hold other UFB potentials

Enumerate

16-06-2010, 08:15 AM

The recent Telecom ad, featuring Reynolds fishing, is very interesting.

- the repeated subliminal suggestions as to "give it a go". XT Network = "give it a go"

It is also interesting that while he is fishing ... he is actually shown fishing. Talk about layers of subliminal message.

However, it has the following disadvantages:

- having some Scottish git laying it on thick about wonderful NZ countryside, NZ confidence, NZ "give it a go" attitude makes Telecom look like some foreign multi-national trying to stitch up the locals

- Telecom is more than XT. There is an implied negative connotation across all Telecom services with the focus on "XT failed, but it is right now"

Having said this ... it will probably work. Paul Reynolds cuts a reasonable figure as a Jedi Knight, using mind tricks to suggest "XT network - give it a go".

For my money, they should have brought back Teresa, dressed as Yoda ... "XT network, give it a go, you will ..."

minimoke

16-06-2010, 10:06 AM

The recent Telecom ad, featuring Reynolds fishing, is very interesting.

It doesn't work for me. XT was supposed to be leading edge technology - have we forgotten the Top Gear guy ads already. Its trying to pull at traditional kiwi values - "give it a go" "have a joke" "trust us , she'' be right". The ad might work for ECO flogging candles - sure we'd give one a go, sure we'd support the kiwi under dog with a creative new "homely" product - but technology we're supposed to let multi million $ business run on. I don't think so.

And while on the subject of telecom advertising - what about Chorus. How often do you see too young guys in a van trundling around town. It will be one guy and he'll be middled aged or foreign. They are also ramping up TiVo - but still quiet on sales volumes and GP - if any.

And while they were keen to encourage me to move my broadband business else where I still haven't heard back from them.

COLIN

16-06-2010, 11:15 AM

Regulation on mobile termination rates. Another nail in TEL's coffin. Too big to allow to win. A bleak outlook investment-wise.

Hoop

16-06-2010, 12:43 PM

Telecom XT... Richard Hammond spoof (http://www.youtube.com/watch?v=ooc6A6ekNho&feature=related).......watch the end....lol :)

sharer

16-06-2010, 02:47 PM

Regulation on mobile termination rates. Another nail in TEL's coffin. Too big to allow to win. A bleak outlook investment-wise.
Sadly, Colin, you seem to have summed it up in a few words there. And now we also face a sell-off of AAPT (net capital loss apparently of about $2,500,000,000 - i don't even know whether these are NZ or Oz$$, but with numbers so big it almost doesn't matter any more). Then apparently we'll be getting split shares, in Chorus (so smothered in regulations it won't be allowed to earn a decent profit, much less pay good dividends), plus "Retail Telecom", worth anything or nothing - reading the balance sheets & doing arithmetic is once again going to be quite irrelevant, in the face of entrenched incompetence. TEL is enough to persuade me so-called fundamental analysis is a complete waste of time on the NZX offerings. (Respectful apologies to Snoopy & others).
And now we get to having TV programs interrupted by some foreign chappie on a fantastic yearly stipend gadding about with a fishing rod. Any bets on how likely it is that Biosecurity following up on his progress through our back country streams will find the whole lot infested with Didymo? (The only "added value" now likely to be found in the next decade).

Snoopy

16-06-2010, 04:16 PM

And now we also face a sell-off of AAPT (net capital loss apparently of about $2,500,000,000 - i don't even know whether these are NZ or Oz$$, but with numbers so big it almost doesn't matter any more).

Sadly Sharer, you have to put a bit more work into FA than reading glib headlines. If Telecom sells AAPT, they will get around book value for it. That $2.5b referred to in the press is the total of write offs made on AAPT in previous years. It is not a new write off, as you seem to think it will be.

SNOOPY

Snoopy

16-06-2010, 04:18 PM

Regulation on mobile termination rates. Another nail in TEL's coffin. .

Mobile phone calls go two ways. In the old Vodaphone/Telecom duopoly, a reduction in mobile termination rates would have statistically increased Telecom's profits because they had the smaller market share. Even 2 Degrees arrival and some 200,000 2 degrees customers later, with around four million Telecom and Vodaphone phones out there, the resultant increase in Telecom profit would probably only be modestly reduced.

SNOOPY

Snoopy

16-06-2010, 04:20 PM

Then apparently we'll be getting split shares, in Chorus (so smothered in regulations it won't be allowed to earn a decent profit, much less pay good dividends),

Chorus will be allowed to earn a satisfatory profit because if it isn't, the investments required to improve the network will simply stop. Probably the profits will be lower than now, but if they link into the government broadband initiative as is rumoured, they will be a monopoly. This should cause a PE multiple rerating because although the profits will be lower, they will also be surer. Profit doesn't have to increase for the value of Chorus to go up.

SNOOPY

Snoopy

16-06-2010, 04:22 PM

plus "Retail Telecom", worth anything or nothing - reading the balance sheets & doing arithmetic is once again going to be quite irrelevant, in the face of entrenched incompetence.

Retail Telecom is still a great little cashflow generator and should include the XT mobile assets. To suggest that these assets may not be worth anything demonstrates a poor grasp of valuation methods.
Even if there is 'entrenched incompetance', that doesn't mean that another company can't come in and take over these assets and manage them better.

SNOOPY

minimoke

16-06-2010, 04:23 PM

Any bets on how likely it is that Biosecurity following up on his progress through our back country streams will find the whole lot infested with Didymo? (The only "added value" now likely to be found in the next decade).
If the Tongariro gets Didymo at least you'll have someone to blame!

sharer

22-06-2010, 01:48 PM

Reported today TEL has accepted person from Shareholders' Assn appointment to the Board.
Could be a significant hopeful sign for the future?

macduffy

29-06-2010, 08:53 AM

So the Chairman is looking forward to retirement but will stay on meantime until TEL has completed the structural changes likely to be required by government.

I'm not sure which is worse. To change horses mid-stream, as it were, or to continue under the leadership of a "trainee pensioner".

Disc: Regret that I still hold a small TEL position in my (very) long-term portfolio.

The GrandMaster

30-06-2010, 10:27 AM

minimoke

21-07-2010, 01:08 PM

ha ha good one telecom.

You stuffed up Go Large!

Then you cancel the Big Time plan after a year because you didn't for see the demand and couldn't handle the activity.

Then write to customers giving them an option of going to other providers.

Then offer customers 20gb total up/down for the same price as unlimited.

And then offer new customers double the data at the same price existing customers pay.

And Vodaphone can still do more data at a cheaper rate. And with Telstra I could get MySky.

And we have a dimwitted govt eager to roll out Fibre to the Gate - Why bother - theres no data allowance around to make it worth while.

peat

22-07-2010, 09:56 AM

Then offer customers 20gb total up/down for the same price as unlimited.

You can actually sign up for the 40gb plan and only pay the same as before for 3 months. and then (if you dont want to pay more) swap back to the 20gb plan. I checked - its kosher.

but yeh it stinks as a long term customer to see the offers being made to new recruits.
at the end of this 3 months I will do a full review of all ISP options.

and re the share price

here on the weekly chart its bouncing off the candlestick hammer bottom and the RSI divergent oversold situation is correcting - almost looking like a technical recover is underway , resistance at the various lines and the yellow cloud on the chart attached

Snoopy

26-07-2010, 11:23 PM

What continues to amaze me is that the fourth business unit of Telecom, namely Gen-I, that contributes 1/3 of the total revenue stream is hardly mentioned in these forums.

How much revenue does Gen-i really contribute to TEL? On page 53 of the FY2009 annual report revenues are shown as $NZ1.501 billion. Of that only $NZ468m is IT services. The rest is stuff like local services, calling mobile, data and broadband. Are Telecom sending out high powered IT consultants, then adding on their clients phone bills to boost revenue in this section of the company? Do 'normal' IT consultants behave like this? Is Gen-i a smokes and mirrors income generator for Telecom, whereas in reality the direct activities of all of those heavyweight IT people create massive losses for the company? How much would Gen-i fetch if sold on the open market? Anyone like to guess?

SNOOPY

Stranger_Danger

27-07-2010, 07:14 AM

What it would fetch and what it is worth are two different things. I'm sure it would fetch a fair bit, but I sure wouldn't want it.

I suspect your instinct is right - its a dog.

Snoopy

27-07-2010, 10:53 AM

I'm sure it would fetch a fair bit, but I sure wouldn't want it.

What piqued my curiosity was that in the FY2006 report there is a business segment called "IT Services" (revenue $386m AR2006, or $420m AR2007), in FY2007 it became "NZ Technology and Enterprises" (revenue $443m AR2007 or $1,452m AR2009) and in FY2009 "Gen-i" (revenue $1,501m AR2009). Yet "Gen-i" was an identifiable business in FY2006. But what it means within Telecom has obviously changed.

My unthinking understanding of "What is Gen-i?" was "IT services". In the 2009 annual report, p75, this was $468m in revenue, not $1,501m. Perhaps I am wrong?

SNOOPY

sharer

29-07-2010, 02:36 PM

But whose gurgler?
The following should only be read by those able to survive yet another
TelecomNZ disaster story of lost opportunities and financial loss.

http://www.theaustralian.com.au/business/tpg-and-iinet-lock-horns-in-battle-for-aapt/story-e6frg8zx-12258981921

sharer

29-07-2010, 02:53 PM

... were substantially reduced in recent times, but not enough to inhibit investment by new international and national investors. Seems they could be in business in 2012; what next?

DomPost story today here:

http://www.stuff.co.nz/dominion-post/business/3967863/Asias-telco-Pacnet-joins-sea-cable-deal

buns

29-07-2010, 03:35 PM

AAPT sale!? nearly, there goes the retail side of it. The market like it, up to $2 nearly

Remember TEL owns about 20% (I think) of I-Net as well

Silverlight

30-07-2010, 01:34 PM

Telecom Corporation of New Zealand Limited - Trading Halt Request

Telecom Corporation of New Zealand Limited (Telecom) requests that NZX and ASX halt
trading in its securities on their respective stock exchanges pending the outcome of
discussions in relation to a disposal of assets.

We request that the trading halt be granted until a further announcement is made to the
market. Telecom is not aware of any reason why the trading halt should not be granted.

Silverlight

30-07-2010, 01:36 PM

Telecom announces sale of AAPT Consumer Division and sale of 18.2% stake in iiNet

Telecom today announced that it has entered into a binding agreement with iiNet Limited ("iiNet") whereby AAPT will sell its consumer division to iiNet for A$60 million. The transaction is subject to iiNet shareholder and customary regulatory approvals. Telecom currently estimates the transaction will have a net negative impact on AAPT’s FY11 EBITDA of around A$10 million. Guidance will be updated if required following approval of the sale by iiNet shareholders.

Separately, Telecom today announced that is has sold its 18.2%(1) stake in iiNet to institutional and sophisticated investors for approximately A$70 million. The carrying value of this investment was A$81 million at 30 June 2010.

When combined, the proceeds from the sale of Telecom’s 10.1% stake in Macquarie Telecom announced yesterday, the sale of AAPT’s consumer division and sale of the 18.2% stake iiNet will generate approximately A$140 million of sale proceeds for Telecom.

AAPT will now focus all its effort on leveraging its Tier 1 network infrastructure to deliver superior voice, data and internet solutions to the wholesale and business market.

“Together these transactions rationalise non-core assets, strengthen Telecom’s financial position, and help reposition AAPT’s operations into a focused, network-centric wholesale and corporate business that is wellpositioned for future growth” said Telecom CEO, Paul Reynolds.

peat

02-08-2010, 10:14 PM

just another great divide ....

GR8DAY

03-08-2010, 08:54 AM

......"great" being the operative word Peat..........great for shareholders Im sure........the sum of the parts will be worth more than the whole..........shareholders should benefit. Telecom now making all the right moves to secure part of (if not all) the UFB package. Chorous will be spun off conditional to govt acceptance of Telecom proposal.......govt wants that of course....win/win. Clever work Reynolds (for once).......hope they continue to build on this momentum.

peat

04-08-2010, 10:45 PM

Standard and Poors dont seem to think its too gr8 GR8day

Standard and Poor's puts Telecom Corp of NZ's A credit rating on creditwatch negative on separation plan

05-08-2010, 07:08 AM

Standard and Poors dont seem to think its too gr8 GR8day

Standard and Poor's puts Telecom Corp of NZ's A credit rating on creditwatch negative on separation plan
Surely that is a given as they have no idea what the new entity would look like. One assumes they will split the debt equally but they may overburden one of them, say the network one, on the basis it will have steady cashflows for interest payments.

GR8DAY

05-08-2010, 09:58 AM

.......lucky I sold out yesterday Peat!!

peat

06-08-2010, 07:40 AM

I dunno if this story is well known or not but apparently Telecom were offered TradeMe for 10 mill and they laughed at Sam Morgan
later they offered him 50 mill and he laughed.
lol.

Snoopy

08-08-2010, 06:59 PM

Finetoothing my 2009 AR today, I found a 'new' section (p135) where the total of 449 ADR holders now hold 11.2% of TEL shares. Compare that to 477 ADR holders and 13.8% of the company in AR2008 (p135) and very starkly to 1992 when the just privatised Telecom had just 25 US based shareholders on the register. But in 1992 the two big holders, Ameritech and Bell Atlantic, held 68.4% of the company!
I knew that US interests had been selling down over the years. But it is starkly astonishing how the US shareholder base is continuing to collapse.

SNOOPY

Snoopy

09-08-2010, 09:58 AM

AR2009 p74 'Segmental Analysis'

"Segment assets, liabilities and capital expenditure are not reported to Telecom's Chief Executive Officer."
A remark made in the context explaining how the different divisions of Telecom are reported on to shareholders in the same way as they are to the chief executive. Fair enough to give the same report to Reynolds and the shareholders. But isn't this just another way of saying:

"We don't care about the size of the asset base our business units operate with, how much we have to borrow to sustain it, and how much capital we have to spend to maintain it."

Why would anyone choose to run a business like that? By contrast PGW is very clear to spell out segment liabilities segment assets and segment capital expenditure. Anyone got an idea of why Reynolds is running Telecom like this? Does any other multisegmented multinational behave this way?

SNOOPY

Snoopy

23-08-2010, 08:18 PM

I've been as grisley as most over the last month regarding TEL. But I thought Friday's annual result release was a very good result in the circumstances. Cashflow very strong, final quarter dividend maintained, Alcatel-Lucent giving TEL multimillion dollar compensation for all the XT phone outages (implied but not stated). Next year the dividend will probably go down, but the return of imputation credits should compensate. The result was sufficiently encouraging for me to top up my TEL shareholding with a few TEL secured for $2.04. I will be looking at buying more TEL shares in the future too, with any sign of market weakness.

SNOOPY

bung5

24-08-2010, 09:36 AM

Still a some risk that telecom won't get in on the fibre network. Without that they will become another ISP when the copper becomes phased out. ( + the mobile & IT buisness )

Snoopy

24-08-2010, 11:21 AM

Still some risk that telecom won't get in on the fibre network. Without that they will become another ISP when the copper becomes phased out. (+ the mobile & IT buisness )

Quite true. But if Telecom aren't inside the government fibre network tent, their rearguard copper action will make it hell for the new fibre network to operate profitably. I think the current TEL share price has already priced Telecom out of the fibre loop in the main centres at least, so I see little share price downside from whatever happens here. Whatever happens, the copper network will be with us for many years yet.

SNOOPY

sharer

24-08-2010, 01:30 PM

Thanks for your comments Snoopy, which always give me hope that TEL will come right.
Do you have some thoughts about how TEL might be affected if the new Oz govt dumps the NBN fibre plans?
(After all, TEL has "invested" many millions of $$ trying to get into that market, & presumably still hopes to find something that works).

peat

24-08-2010, 02:46 PM

if Telecom aren't inside the government fibre network tent, their rearguard copper action will make it hell for the new fibre network to operate profitably

SNOOPY
Yes exactly
this is why Telstra got such a good deal in their negotiations with Aussie govt methinks.
Copper has the potential to deliver more and more bandwidth. Remember we used to think a 56 k modem was the max.
I'm getting 12 MB/s now thats gotta be enough for a few more years at least.

bung5

24-08-2010, 03:14 PM

Yes exactly
this is why Telstra got such a good deal in their negotiations with Aussie govt methinks.
Copper has the potential to deliver more and more bandwidth. Remember we used to think a 56 k modem was the max.
I'm getting 12 MB/s now thats gotta be enough for a few more years at least.

yes 12 MB/s download... maybe like 2 MB/s up. Fibre today will give you 1 GB/s both ways with old technology.

bung5

24-08-2010, 03:17 PM

Internet isn't the only thing the fibre will be used for either

peat

24-08-2010, 03:54 PM

but the important question is 'how much will people pay for super hi speed internet' when hi speed internet works well enough
I think we've already seen the answer in the time it took most people to get off dial up

Snoopy

24-08-2010, 04:54 PM

Tha
Do you have some thoughts about how TEL might be affected if the new Oz govt dumps the NBN fibre plans?
(After all, TEL has "invested" many millions of $$ trying to get into that market, & presumably still hopes to find something that works).

Didn't Telecom just onsell most of the 'retail' side of their AAPT business? I guess the answer to your question is how well the existing wholesale network in Oz meshes with NBN. And I think the answer to that is, 'it is too early to say'.

SNOOPY

sharer

25-08-2010, 04:23 PM

Didn't Telecom just onsell most of the 'retail' side of their AAPT business? ...

Yes. I thought they had retained most/?all of their AAPT network business (presumably 'wholesale').

I guess the answer to your question is how well the existing wholesale network in Oz meshes with NBN. And I think the answer to that is, 'it is too early to say'.
SNOOPY
Agreed. With the main parties even pegging, & now it seems there may be 4 Independents, & the fact that only mining taxes & NBN seem to be policy differences between the two main bloc parties, it is hard to guess how the views of the independents about NBN might affect the bloc favoured by them to form a government. They seem to be "rural" type MPs & presumably will want NBN to go ahead, so for that may favour Labour, elsewise want the Opposition coalition to abandon their election stance and save at least part of the NBN plan.
It might be relevant for TEL, or not, that uncertainty about NBN is said to be a big factor in a collapsing share price for Telstra.

GR8DAY

26-08-2010, 11:02 AM

.....Wanna treble your bank income at the moment???......easy.....buy Telecom! we're getting 3.2%pa with National Bank at the moment.........in a few weeks Telecom are paying a 12%pa quarterly divi PLUS potential SP upside (chances are). "Derrrr now Im gonna have to think about this one for a while" .......NO CONTEST!

bung5

26-08-2010, 11:11 AM

GR8DAY

26-08-2010, 11:28 AM

bung5

26-08-2010, 12:04 PM

......OR GAIN ANY M8.........YA TAKE YA CHANCES.....as I say no contest really esp with Tel sitting around a 15 year low.....( anyway BUNG who said you can't loose your capital in the bank........no guarantees.....soon)

Yes, there are plenty of reasons it is at a 15 year low. yes...no denying it could be worth the risk.

Dr_Who

09-09-2010, 01:57 PM

Down nearly 6% today.

peat

09-09-2010, 02:32 PM

Down nearly 6% today.

if thats on the basis that they werent named in the preliminary contenders for the RBI then it might seem to be an over-reaction

however long term viability of the company is dependent on stalling the phase out of copper OR being involved in its replacement with fibre.

I personally think copper is sufficient on a cost evaluated basis but I could be wrong
Chris Barton talks of the difference between the two delivery methods in todays Herald
Copper and fibre bandwidth gulf is gargantuan
http://www.nzherald.co.nz/technology/news/article.cfm?c_id=5&objectid=10672014

buns

09-09-2010, 03:39 PM

I think by ‘RBI’ you mean “UFB’???

Telecom taking a national approach and rolling fibre out to the rural areas were looking at canning the RBI initiative.

Overall, bad bad news for TEL. This decision just shows, they still don’t have there govt on there side..

They said, all or nothing, now 3 of these LFC’s are in business, TEL has to compete right? Yes this should be fine for a wee while, but once Fibre is rolled out. This copper will be sunk.

Yes TEL will still have the most fibre (Auckland), but this will all be regulated now, with the current regulation staying on which was going to be removed if they won/demerged.

Way to much uncertainty here.

peat

09-09-2010, 03:51 PM

I think by ‘RBI’ you mean “UFB’???

indeed
I stand corrected
http://www.nbr.co.nz/article/telecom-shunned-first-round-crown-fibre-negotiations-129701

buns

10-09-2010, 09:41 AM

http://tvnz.co.nz/business-news/telecom-misses-fast-broadband-3767507/video?vid=3769781

brettdale

10-09-2010, 12:28 PM

Surly this thing wont drop below $2

POSSUM THE CAT

10-09-2010, 01:26 PM

brettdale it has before not so long ago

sharer

10-09-2010, 02:24 PM

Surly this thing wont drop below $2

"Surly" is right, alas.

As Buns noted above, plenty reasons for TEL to hide in the executive bunker today, & plot some new strategy.
Obviously their understanding of what they thought they were discussing with Government was deluded.

If indeed TEL's preferred "national" scheme is somehow "best", then perhaps the captains of capitalism
may try to devise some manoevres that will ensure the competing "regional" schemes will become quite
uneconomic without truly massive taxpayer subsidies.
Success would mean resignations demanded within the involved ministries.
Probably there is already a small group of counter plotters
in the regulating Ministry planning how to defeat any such TEL countering activity.

minimoke

23-09-2010, 11:09 AM

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.
One year on and we see another ferrit taking to ground. TEL now offering Tivo to TEL phone subscribers for $360 at $10 a month interest free on account. Looks like they are quitting stock and I'm expecting shortly a TEL announcement exiting this opportunity which will no doubt return no profit to shareholders.

peat

30-09-2010, 02:48 PM

Bilo

30-09-2010, 03:20 PM

- its just that we dont trust you Telecom to not ream us up the rear if you have control becoz thats what you've always done!
no shareholders of a major company providing a very useful service has got reamed more than telecom investors at the peak, peat.

sharer

01-10-2010, 03:03 PM

Let the posturing begin
Telecom 'well-positioned to co-exist with state infrastructure'
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10677142

a rerun of the Telstra scenario where lumbering incumbent fearing deep walleted state funded competition has to calm shareholders while not upsetting govt with (too blatant) threats.

I mean the argument that it doesnt make sense to duplicate the fibre network is obvious enough ...

The past 3-year behaviours of TEL & TLS are depressingly similar. While recently TEL may seem to be holding up (v. optimistically), TLS has declined badly in recent weeks. With the very uncertain state of political power in Australia, some speculate that their NBN will quite likely never happen (soon); even if it does go ahead, there is public questioning about what it might actually be useful for, as far as business is concerned.
That debate in NZ hasn't led to much clear idea of just what good our expensive fibre net might be either - but i think the NZ officials are likely to drive it through regardless.

2952

Snoopy

03-10-2010, 08:44 AM

p33 of the 2010 Annual report:
"Telecom has outsourced the operation of its information service systems to Hewlett-Packard (HP) under an agreement to 2012 that covers fully contestable application development and maintenance services and facilities management services."
I thought that was the kind of stuff that Telecom's own business unit Gen-i did. So why are TEL buying these services from one of Gen-i's competitors?

SNOOPY

Snoopy

04-10-2010, 02:44 PM

Snoopy, A reason: TEL want the Gen-i brand out in the market so if they're doing stuff for TEL they lose that brand presence.

Thanks Belg, makes sense. I also noted in the 2010 annual report that loyalty payments and inconvenience discounts over the XT mobile infrastructure failure have cost TEL $16m (p30 AR2010) in FY2010. However, under 'other gains' there was a $27m windfall (p88 AR2010) from 'various resolutions and settlements reached with a supplier'. Anyone like to bet that supplier wasn't Alcatel Lucent? It does seem the failure of XT has lead to a one off overall profit of $11m for TEL.

SNOOPY

peat

04-10-2010, 04:42 PM

Chris Barton driving another stake into the heart

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10677360
Roll over Telecom, the Jetsons' revolution has finally arrived

Communication services were down 2.6 per cent - the third quarter in a row where communication activity has declined. Unheard of.

winner69

26-10-2010, 09:29 PM

Here's an interesting piece that shows the relative valuations of telcos around the world

http://www.businessspectator.com.au/bs.nsf/Article/THE-DAILY-CHART-pd20101026-AKUZW?OpenDocument

Heck if Telstra is the biggest load of **** in this part of the world then what would one say about TEL .... TEL figure on the chart would be 3.3 ..... way below the the big red column for TLS

Then again looking with the rose tinted glasses on we could say that TEL is so undervalued that its not funny.

To be on par with TLS (on a EV/EBITDA basis) the TEL shareprice should be $3 and a bit

And to think that in June 2005 EV/EBITDA was close to 7 so even this seems to have fallen more than TLS

What a disaster but maybe rock bottom ..... you never know TEL might just show respectable valuations one day .... just maybe

darksentinel

10-11-2010, 02:04 PM

Isn't there a UFB announcement due this week or so?
Early leak?

sharer

12-11-2010, 06:02 PM

And announcement today TEL & Vodaphone have put in a joint bid for the RuralBI - first sensible sounding thing i've noted for ages - could further indicate better value for separated TEL+Chorus2 shares?
I would also appreciate your thoughts Snoopy.

Snoopy

13-11-2010, 08:57 AM

Rumour has it TEL could be worth 2.80 with Chorus separation. Snoopy, got a view on that?

Hard to see whereabouts the short term earnings are going to jump in the future from a combined or even separated Telecom/Chorus Belg. In the medium term perhaps XT will make a better contribution to the Telecom bottom line? However I do see an earnings multiple rerating when the Telecom/Chorus future path becomes clearer. The market hates uncertainty. IMO clarifying the future may in itself release value for shareholders even as earnings are static. However I see such a gain might see today's Telecom's SP push up to $2.40 or so. Longer term an independent retailer 'Telecom 2' could be a takeover target?

SNOOPY

Snoopy

07-12-2010, 10:55 AM

I do see an earnings multiple rerating when the Telecom/Chorus future path becomes clearer. The market hates uncertainty.

http://www.crownfibre.govt.nz/news

First UFB contracts let. Slightly lower than current market prices for low end broadbanders. For high end broadbanders UFB has only met the existing market. Big savings promised though for high volume business users. Telecom not a winner 'up front' yet, but are they (through Chorus) involved behond the scenes? Inital market reaction negative for TEL.

SNOOPY

Snoopy

07-12-2010, 02:25 PM

The rub is going to be (and always has been) how fast every link in the chain will be! Just getting 2.5 Mbps around a city at peak time and maybe bursting to full 100 Mbps plus or 1 Gbps around a city ain't going to change things much from the present.

Belg, the UFB network when it gets laid out from scratch will have no customers. Those first few customers that sign up will have a big blank glass fibre pond to play in. Broadband speeds are going to fly aren't they, (at least initially)? Of course, I'm not sure that reaching your monthly data cap faster is a huge advantage?

SNOOPY

Animeart

08-12-2010, 10:07 PM

What's the problem with the government anyway? Let's stop looking back and start looking forward. If it really wants to make a difference then it should overhaul the system so that directors and CEOs get punished personally for their wrongs. It's not too late to fine the exCEO (Teresa G) and the board at the time for those illegal moves made back then. Stop interferring with the current CEO's effort to rebuild the company and give him a chance to show the public that Telecom is now run very differently. Why is the country and the shareholders still paying for Teresa's mistake back then? When will it ever end? It's like forever punishing the son for his father or grandfather's mistake. Can't the government see that it doesn't matter how much you fine a company, because it will never really change the way the people who run it if they are determined not to play by the rule. Afterall, it's not their money so it doesn't hurt - simple as that. Why else do you think those top US executives are still smiling after running their company almost to the ground? In short, if the court is so keen on making a statement then punish those directly responsible. Also, awarding contract to those small player who can't really deliver, for the sake of equality, will do nothing to move NZ forward in the UFB plan. There is nothing wrong with monopoly as long as you have enforceable steps in place to overseas it's actions. Does the government have so little faith in its enforcement agents that it needs to break up Telecom, an 100% own NZ company, just so that it'll make these agencies' job easier? Pushing aside all those arguments about replicating same services, and hence inefficiency, just so that the smaller players can have a piece of the pie too, in a small market like NZ there is really no point in having so many players. Just look at what happend in the aviation industry. There is simply no room for a third carrier in the domestic market. If the government were so keen on breaking up monopolies why haven't we seen anything done about AIAL, the most obvious and talked about one? Because monopoly in a small market may actually be the most efficient way to run a business - like it or not. The way the NZX is looking I reckon the sooner we integrate with ASX the better. The people in charge at the beehive apparently have no idea how to promote business locally, so better we hand it over to our OZ cousins.

Snoopy

11-12-2010, 11:30 AM

If (government) really wants to make a difference then it should overhaul the system so that directors and CEOs get punished personally for their wrongs. It's not too late to fine the exCEO (Teresa G) and the board at the time for those illegal moves made back then.

TG evading the government running around the country in a black and white striped suit as a kind of south pacific 'Beagle Boy'? A bit harsh don't you think Animeart? She had some robust stoushes with the commerce commission to be sure, but then so did Vodaphone. Too late I think to do any fining now. Besides I think TG is more a Scrooge McDuck figure now, diving daily into her money bin for that morning swim.

Stop interferring with the current CEO's effort to rebuild the company and give him a chance to show the public that Telecom is now run very differently. Why is the country and the shareholders still paying for Teresa's mistake back then? When will it ever end? It's like forever punishing the son for his father or grandfather's mistake. Can't the government see that it doesn't matter how much you fine a company, because it will never really change the way the people who run it if they are determined not to play by the rule. After all, it's not their money so it doesn't hurt - simple as that.

With many a successful business, you don't get ahead by not trying to push boundaries. Sometimes of course you can push too far. You can argue that TG did and Telecom paid for it.

Also, awarding contract to those small player who can't really deliver, for the sake of equality, will do nothing to move NZ forward in the UFB plan.

It is quite hard to see who has won these contracts. As you say Animeart some of these power company joint ventures are going to have to hire contracting companies to do the work. And one of the best contractors around for this sort of thing is probably Chorus.

There is nothing wrong with monopoly as long as you have enforceable steps in place to overseas it's actions. Does the government have so little faith in its enforcement agents that it needs to break up Telecom, an 100% own NZ company, just so that it'll make these agencies' job easier?

Probably yes!

If the government were so keen on breaking up monopolies why haven't we seen anything done about AIAL, the most obvious and talked about one?

There was an enquiry into AIA IIRC. I think it concluded they were abusing their monopoly power, but the money to be saved 'sorting them out' just wasn't worth the spend to do it.

SNOOPY

Snoopy

13-12-2010, 07:46 PM

What's the problem with the government anyway? Let's stop looking back and start looking forward. If it really wants to make a difference then it should overhaul the system so that directors and CEOs get punished personally for their wrongs. It's not too late to fine the exCEO (Teresa G) and the board at the time for those illegal moves made back then. Stop interferring with the current CEO's effort to rebuild the company and give him a chance to show the public that Telecom is now run very differently.

Perhaps today's announcement that TEL has the inside running for partnering the government in UFB for Auckland has reduced your blood pressure Animeart? Looks like the government did see sense after all!

Not quite sure if this deal is really that positive for TEL though. Some of that broadband money is coming from the Telco company levies that have replaced the TSO payments that used to all go to Telecom. Instead of getting all that TSO money as before, or none of it in the worst case scenario of TEL missing out on every UFB partnership, Telecom will likely get part of their government levy back albeit indirectly via the UFB program. But when the UFB network is complete, then what?

Presumably there will be equal access to the UFB network for many telecommunications providers. Telecom having a meaningful stake is probably a necessary derisking exercise for the government. If Telecom hadn't been seriously involved, the incentive would have been to milk their old copper network to the max, making it very difficult for the new competition wired up to USB to be profitable. So is Telecom a beneficiary of UFB, really? Perhaps this is one reason for the somewhat muted response from the market today!

SNOOPY

Snoopy

13-12-2010, 07:55 PM

And now for the 5 year review of my own Telecom share purchases.

3099

The share chart starts at 30/09/2005 with TEL trading at a rather unlikely $6.70. If you don't believe that the Telecom share price was that high back then, you would be right. A complicating issue in the form of a 1:9 'share cancellation' /'capital return' took place over our five year study period. That meant for every 9 shares owned up until the capital restructuring, you only had 8 after the restructuring plus a cash payment of $4.88. Another way of looking at that cash payment was as a one off tax free 'dividend' of 61cps.

However, you can't claim this 61cps dividend came at no shareholder cost. If you consider that you only ever had 8 shares for every 9 you originally had, then those 8 shares have to be worth more to compensate for the 9th etheral share that is now gone. But how much more? I used the share price adjustment formula below:

NSP(9)=OSP(8)+$4.88, where

NSP= New Share Price
OSP= Old Share Price

This is how a share price of near $6 ended up being expressed at $6.70 on my chart.

The magenta line on the chart shows my incremental acquisition price of around $3.40. Obviously the Telecom share price now closed today just above $2.10. So my five years of investing in Telecom has yielded a poor result. This is almost inevitable when after 5 years a share closes near its five year lows. However, if there is something good to be said about my investment in TEL it is this. My average price is lower now, than if I had simply bought and held over the five year period. And TEL has certainly delivered a steady flow of dividends over that 5 years.

SNOOPY

Snoopy

20-12-2010, 05:04 PM

Phaedrus on the PRC thread wrote
Now, years later, the turkey has come home to roost........
"In the case of Telecom I have lost capital, (after all those years of investment!) but I am far from worried about it. (you should be!) This share investing is all about perspective and timeframes. (No it's not. It is all about profit) But if you have a longer than business cycle investment perspective, then buying a share while it is on the way up or down makes not one jot of difference, as in my case." Snoopy right there is the root cause of your losses with TEL and other stocks. You have provided us with example after example of the folly of buying downtrending stocks. Anything that would stop or limit your buying/holding of downtrending stocks would improve your returns and even a device as crude as your cousin's Trailling Stop would help you in this regard.

The problem with not buying in downtrends Phaedrus is that most investors (not you I hasten to add) end up not investing at all in a particular stock because it was once in a downtrend. Their memory of the chart defies investment logic and they miss out when the uptrend starts. By investing my way you do not have to try to pick a bottom or a trend reversal. Since my countless investing in downtrends has yielded a well above average investment performance I will let those numbers stand as justification of my investment strategy. Which incidentally does not depend on getting everything right all the time!.

SNOOPY

macduffy

22-12-2010, 03:38 PM

TEL's "new" CEO finally decides that it's time to get costs under control!

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10695990

Scuffer

07-01-2011, 01:53 PM

just had a letter from some idiots wanting to buy me out of telecom for about $1.45 per share telling me to be quick because this great offer was only for a short period and i wouldn't incur brokerage fees, some poor old sod will probably fall for it companies like these need to get a conscience and stop taking advantage of people.

blockhead

14-01-2011, 08:20 AM

Pleasing jump in sp yesterday, highest for 6 months, no apparent reason for the rise that Blockhead could see ??

Snoopy

14-01-2011, 10:32 AM

Pleasing jump in sp yesterday, highest for 6 months, no apparent reason for the rise that Blockhead could see ??

DOW touching recent highs gives US investors more appetite for 'risky' overseas investment, such as TEL and NZ? Also another quarterly dividend is coming up. I am picking TEL to be one of the start performers of 2011 as all the issues get worked through. At $2.30, it is dirt cheap for a utility.

SNOOPY

Major von Tempsky

16-01-2011, 04:20 PM

Go Snoopy!
I'm buying TEL again.
Look at it's gross dividend yield compared to Fletchers, Contact....

minimoke

24-03-2011, 02:27 PM

One year on and we see another ferrit taking to ground. TEL now offering Tivo to TEL phone subscribers for $360 at $10 a month interest free on account. Looks like they are quitting stock and I'm expecting shortly a TEL announcement exiting this opportunity which will no doubt return no profit to shareholders.
TVNZ today announce they have totally written off their $14.8m investment's in TiVO. So what is TEL's exposure?

Hoop

24-03-2011, 06:44 PM

Read pages 82 to 85 on this thread for ST posters thoughts on the TIVO launch.... then it becomes easy to see why TIVO isn't successful now.

What a unnecessary waste of money and from high salaried professionals that should've known better.

RRR

20-04-2011, 09:51 PM

Good news for telecom today - 2nd biggest stock in NZ. Lack of posts in this forum tells a story - unloved stock, a big company out of favour for 'sharetraders'.

p2r

20-04-2011, 09:57 PM

Quite good leverage on these micro caps too...or better on TELIZAs etc. Do they still have those?

Major von Tempsky

06-05-2011, 12:39 PM

So, Telecom (our second largest share) makes an announcement this morning containing several bits of good news and a maintained fully imputed dividend, and guidance for the future and no one here is even interested enough to comment?!

What does this say about this board? What does this say about these expert professional investors?
Down swilling beer and gin at the RSA are we?
Yes, I did buy some more recently :-), just to upset Dunks "calculations".

Oiler

06-05-2011, 12:56 PM

duncan macgregor

06-05-2011, 04:33 PM

MvT dont you go stirring up McDunk. :D

I suspect he is out fishing in Whangarei harbour watching the tornadoes go by. You got it in one oiler. The only time to sell is when a stock shows sell signals like TEL did over the last few years. Like wise when a stock sinks that low showing buy signals as TEL is doing then its time to buy. Phaedrus is dead right in saying, dont fall in love with a company it blinds you to reality.
Good luck guys tune in now and again to keep you all honest. Macdunk

Phaedrus

06-05-2011, 06:20 PM

The problem with not buying in downtrends Phaedrus is that most investors end up not investing at all in a particular stock because it was once in a downtrend...... they miss out when the uptrend starts. Only if they are being lazy and not even monitoring the stock, Snoopy. Don't forget that the indicators keeping them out of the downtrends are the same ones that will get them in again when the trend eventually reverses.

This chart updates the oscillators from page 107 of this thread. As stated therein "A "buy" signal is triggered when these oscillators rise above the "oversold" threshold." As you can see from the chart below, the subsequent Buy signals (marked by green arrows) were exquisitely timed, getting buyers in pretty much right at the bottom. Such an approach knocks the socks off Dollar Cost Averaging or indeed any system based on buying "value" as TEL continued steadily falling - for literally years.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/TEL56.gif

troyvdh

06-05-2011, 07:46 PM

...woooof....woof....shuffle...doze...wof.....wooo f.....sleep....

blockhead

11-05-2011, 03:25 PM

SP aint dozing or sleeping at the moment, one way traffic just now !

Ann regards fibre pending ???.........and div of course

Scuffer

11-05-2011, 04:45 PM

looks like a lot of overseas investment starting to buy back in, chasing the yield.

Major von Tempsky

18-05-2011, 02:46 PM

up 6.5 cents today....so far....and still no interest in Sharetrader in our second largest share.....

(And BTW, how utterly amazing to find that Belge and I are both cheering for the same thing, whats gone wrong :-0)

sharer

18-05-2011, 04:32 PM

up 6.5 cents today....so far....and still no interest in Sharetrader in our second largest share.....

Minister today announced Govt reversal on the UFB "regulatory holiday" proposal (? possibly because Maori Party demand, law can't pass without them now Act has defected & Labour & Greens oppose).
Could it be that price rise (hit 240/sh during today) comes from calculating now govt will have to shell out lots of $$ as inducement to get TEL, Vodaphone et alia to co-operate in building the UFB.
Some previous indications guessed govt may have to pay $500m +/- $100m to induce private investment unless CommComm locked out for a decade or so of regulatory holiday to give the big boys time to recoup investment and grow the market for UFB to an economically rewarding size. That is, an admission that the whole UFB scheme was always uneconomic (& parallel problems for TLS in Oz).
All of which seems completely in line with criticisms of govt telecomms & UFB policies posted by several of us in recent years.
Also, as typical on NZX, there seem to have been info leaks driving late sales higher yesterday.
Please don't call me cynical, i'm just a sceptic really.