TEL (Telecom NZ Ltd)

[Major von Tempsky]

Now we await some of Snoopy's in depth quality research reflections on this move.

And the start of a guessing game that will occupy all the brokers and research analysts in the country and Australia - which will be the better investment for Mums and Dads, Chorus or Telecom Retail/Geni& and why?

Should investors sell their Chorus allocation to buy Telecom Retail/Geni& or vice versa or just sit pat?

Roll on a quality investment debate!

[Major von Tempsky]

Interesting article by Patrick Smellie recently where he noted that TEL is the most widely held NZ share overseas and that the NZ Govt couldn't risk hacking off these investors any more than they had been hacked off already.

It seems that we have some sort of Labour Party overhang remaining from Helengrad in the Commerce Commission which ignores everything else happening to take easy potshots at TEL for things that happened years ago and are no longer relevant. Someone needs to get these kneejerk pitbull terriers under control - time for a fundamental recasting of the Commerce Commission and fresh personnel!

[macduffy]

Yes, it's a wonder that any overseas investors are interested in TEL given the heavy regulatory hand always hovering over it, not to mention that slick trick of selling the company and then requiring it (shareholders) to make those assets available to competitors!

I'd like to see some quality debate on the split too, Major, but it would take a very persuasive argument to get me investing in either of the new entities.

[sharer]

...
I'd like to see some quality debate on the split too, Major, but it would take a very persuasive argument to get me investing in either of the new entities.

Quite interesting stuff in Dominion this morning, probably online too, leaves us wondering just who will be running either of the separated new companies. Could be sometime before we learn enough to make any reasonable estimates about future profitability of either Chorus or TEL-retail, so as investors we all seem to be flying blind just now.
Chorus seems to be in good hands and running well, but there are strong hints the Govt (i presume actually the officials referred to just above) already have developed plans to re-nationalise the network "at a very good price" - in other words use the power of the State again to dispossess the present owners of their property. Unless there is news of a complete clean out of such officials from the regulating ministry as well as unreasonable little hitlers out of Commerce Commission, it seems a reasonable instinct to steer an investment course well away from Chorus, even if it does seem a good business prospect in other respects.
As for TEL-retail, there seems good reason to doubt the competence & drive of Mr Reynolds will very much longer be available beyond the separation point, perhaps about this time next year. On the other hand an encouraging announcement today about a new (renewed) commercial arrangement with SKY (& a brief remark at the end hinting there may still be some hope for Tivo project). So far only hints about better times to come. We need to see something about how to compete well with Vodaphone etc in the mobile markets where apparently most profits are made. And the continuing commercial failure of vast investments in Oz remain a tormenting mystery.
Now the UFB work can presumably be pushed down to lower executive levels to sweat over, maybe there is still time for Reynolds to kick TEL-retail into some sort of better competitive shape.
Those of us holding TEL have many possible investment scenarios to ponder, & not much reason to feel happy about any of them.
One test i often pose myself is, "If you didn't already have a legacy investment in TEL, would you buy it?"
If the answer is "No" then the question becomes, How do we get out of this with most of our skin intact?
There are other possible and attractive trustee investments to consider as alternatives.
For the short term traders the problem is simpler - with attention to the charts every day, there must be many chances to take a trading profit.

[Snoopy]

Quite interesting stuff in Dominion this morning,

Chorus seems to be in good hands and running well, but there are strong hints the Govt (i presume actually the officials referred to just above) already have developed plans to re-nationalise the network "at a very good price" - in other words use the power of the State again to dispossess the present owners of their property.

I read that article on page C6. I didn't like the bit about crown fibre holdings pricing UFB access on a $3.5billion build price while the real price was likely to blow out to $5.3b-$10.4b. The implication being that Chorus would be responsible for any cost overruns and may have to come begging to the government to be rescued in 5-6 years time. But I would say it is too early to tell if that is indeed how things will pan out. I hope many questions are asked about the structure of the proposed deal at the upcoming Telecom EGM/AGM!

SNOOPY

[craic]

As an OAP, I get a hit from TEL. that is about $100 net per week. If I had my money in a 'safe' place such as a term deposit, I would get half or less each week. This has been going on for years so I don't care as long as it continues. The overseas owners of TEL are the major Australian banks in the main and I often wonder if they manipulate the share price by selling to market down to the low bidders on a friday so that the quoted price in the saturday papers is low and opens low on the monday - the price goes up during the week and down again on late friday trades. A large percentage of people only read the markets in the weekend papers.

[macduffy]

Are you sure it's the banks' own holdings and not the bank nominee company subsidiaries, who could be holding on behalf of any number of, usually overseas, beneficial owners?

TEL's been a good yielding stock in the past and still is at today's low price compared to the "heady" early years. It's just that the market is sceptical of their ability to keep the profits and dividends rolling as the old sources of revenue slow down and the demands to spend on new technology continues.

[craic]

I only know that the banks concerned are the shareholders listed by Telecom on their required list of major shareholders published. As a customer, I have been aware of the changes and advances that they have been making over recent years without diminishing profits. I am also aware of some of the crap that boutique providers claim in their criticisms of Telecom. My home connection - at the end of miles of copper and across many electric fences - is used from time to time by a Senior Architect, Market Data Systems, Bank of America (Europe) and he is quite happy with the setup compared to his own home setup in London which I use from time to time.

[blockhead]

Good spike up over the last week, not sure what that is about

[BIRMANBOY]

Woo..hooo...whens it going to stop? Vindication for all those "holders" and divy guys.

[PhaedrusFollower]

Yea Birman, so the market likes:

Ultra Fast Broadband contract
Splitting the bohemith into 3 little behemoths
Continuing Divis

Anyone care to offer their TA graph for Telecom to help my decision if I should buy more (first tranch at $1.97 amazingly!)?

I work with Telecom Sales teams on a weekly basis....they have been going through staff cuts all year by "area" , Marketing, Sales, Finance etc.... they also had the most frugal xmas party you could imagine... so I think there is considerable attention being given to costs.

[BIRMANBOY]

Hey bugger the graph...its on a roll...help it along and buy some more...rollling, rolling, rolling, keep them doggies rolling alongggggg [

[Phaedrus]

The best time to buy TEL (or any stock) is when it triggers Buy signals - perhaps from a trendline break and/or by rising above the technically OverSold level. The worst time to buy is when a stock is technically OverBought. Take a look at the current Stochastic Oscillator level and decide for yourself whether now is a good time to buy TEL - or not.

If you are really keen to top up your holding and view the Buy signals shown here (green arrows) as being too few and far between, then you could use a faster, more active oscillator such as Williams'%R(14). The last few W%R Buy signals are marked here by light blue arrows. Unsurprisingly, right now this oscillator is at a strongly OverBought level.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/TEL74.gif

[PhaedrusFollower]

Thanks very much P. . . I will "follow" this with interest . . . and my money stays in my pocket.

[BIRMANBOY]

Maybe they listened to Phaedrus and kept their hands in their pocket? From his post below 4/07 Just goes to show no-one gets it right all the time. No disrespect intended or implied just making the point that no sytem or method or book can or should be used without a healthy dose of skepticism, inquiring mind and caution. Theres some comment on the TEL vs Tlstra thread as well. I always buy with the dividend as the predominant factor anyway so doesnt really matter but if you were trading would be some happy campers out there especially if they topped up at $2 odd.
"""""The best time to buy TEL (or any stock) is when it triggers Buy signals - perhaps from a trendline break and/or by rising above the technically OverSold level. The worst time to buy is when a stock is technically OverBought. Take a look at the current Stochastic Oscillator level and decide for yourself whether now is a good time to buy TEL - or not.
If you are really keen to top up your holding and view the Buy signals shown here (green arrows) as being too few and far between, then you could use a faster, more active oscillator such as Williams'%R(14). The last few W%R Buy signals are marked here by light blue arrows. Unsurprisingly, right now this oscillator is at a strongly OverBought level.""""



Not much comment on the wonderful performance in the last 3 months (or six months if you're playing the longer term).

Why is that?

[Snoopy]

Not much comment on the wonderful performance in the last 3 months (or six months if you're playing the longer term).

Why is that?

The performance just gets better and better. Up strongly on the market today, right against the market trend. TEL has been unloved for too long. But even so I would have to do more homework before I considered buying at these prices, even despite that dividend yield.

SNOOPY

[BIRMANBOY]

Yes but someone(s) buying...maybe they know more than us?? For every seller there's a buyer and it seems like theres a lot of upward pressure behind this stock even after the profit takers have come and gone.
The performance just gets better and better. Up strongly on the market today, right against the market trend. TEL has been unloved for too long. But even so I would have to do more homework before I considered buying at these prices, even despite that dividend yield.

SNOOPY

[peat]

I dont think coppers done with yet!

[Major von Tempsky]

re Birmanboy's pseudo-scientific graphs: - the best time to buy is not when the La Nina Oscillator has intersected with a head and shoulders formation crossed by a 145 and a half days moving average but when the gross dividend yield percentage is sustainably well above the market average and well above what you can get at a bank or a dodgy finance company.

[Major von Tempsky]

Good, good.

Phaedrus thinks TEL is overbought and not a good buy? The chicken entrails must be wrongly oriented and he's been consulting Ken Ring....
(and thus agrees with Duncan McGregor, shucks, birds of a feather flock together?)

Excellent, that means its time to buy more :-)

You ain't seen nothing yet.

All the factors in the report which I painstakingly read through look positive to me except the minor one that the new companies won't start with any imputation credits which is why TEL is clearing them all out now.

Okay, there's no guidance for next year now so you need to be brave now.
But remember Peace has now broken out between TEL and the Government. And TEL has 70% of the UFB plus at least half of the RFB.

Will be most interested to see what Snoopy comes up with in his research. I respect his analysis more than anyone else here, it's deep, thorough, thoughtful and it takes awhile.

[macduffy]

A closer inspection of Phaedrus' last comment on TEL - 4 July by the way - shows that the TEL SP was around the $2.50 mark at the time.

What is it now? Around $2.15?

Over 40 years' of investing has taught me that it pays to overlay good fundamental research with an appreciation of sound TA. I look forward to welcoming Phaedrus back to these pages on his return!

[BIRMANBOY]

Hey MVT ..not my graph or quote (i couldnt figure out how to do the quotes properly so it looked like my quote I suppose)..it was Phaedrus..i was merely pointing out that his "opinion" was that TEL was overbought according to various and sundry MAthematical formulas which I wouldnt understand at the best of times. I further pointed out , in a nice way that at that particular time he was wrong in his interpretation of the "entrails". His interpretation of TEL at that time was "overbought" and obviously in hindsight was a poor call. May have been a bit harsh picking out a "single"? mistake from a checkered career but I wanted to make the point that buying, trading and selling shares is not an exact science and some people tend to lose sight of the fact that just because something has behaved in a certain way five, 10 or 20 times is not necessarily a decisive indicator of future behaviour. Problem wth "systems" is that sometimes they promote automatic behaviour instead of reasoned behaviour. The only "graphs" I use are historical share price and dividend history. I dont have time or inclination to indulge in extensive analysis that he was obviously fond of. (and in most instances probably extremely good at). <
re Birmanboy's pseudo-scientific graphs: - the best time to buy is not when the La Nina Oscillator has intersected with a head and shoulders formation crossed by a 145 and a half days moving average but when the gross dividend yield percentage is sustainably well above the market average and well above what you can get at a bank or a dodgy finance company.

[tricha]

Would you touch a new listing, that the govt will bring in when they get re-elected.???? No, they have to much control, Telecom is a prime example, it should be renamed Telecon

Would you touch Telecom shares, when they are givening the opposition a share of their network on a plate. Hmm

Telecom fast-tracked the company's application to co-locate on their pole and it was now with the council for consent, he said.


http://www.stuff.co.nz/nelson-mail/communities/5819725/Relief-over-Mapua-tower-move

[ananda77]

[QUOTE=Major von Tempsky;354997]Good, good.

Excellent, that means its time to buy more :-)QUOTE]

...of course it's a BUY at these levels!!

Kind Regards

[ananda77]

...think market driving TEL into the 2.35_2.40 mark before it'll get wobbely again

Kind Regards

[Major von Tempsky]

Anyone know anything of the antecedents, qualifications, experience, business acumen, age.... of "the industry's newest forecaster, IDC Research analyst Glen Saunders"? (today's Press p A7). Says he's "a former Telecom market intelligence manager".
Strikes me he knows rather less than the older ones and is thrashing around desperately looking for an angle, any angle.

Not a word about the developing capital return/what's to be announced in February.

Not a word about when 2degrees will achieve a profit or continuing sizeable capital injections required by 2 degrees.
And I thought the last data I saw showed that Vodafone is yielding market share.

Strikes me that "newest" may be a marketing degree grad with no technical or financial knowledge with a rather narrow marketing approach making a stir to get some personal exposure.

To be a "market forecaster" he needs to know and make comment on the other industry players not just chuck around stuff from Tel's old market research dept.

[Major von Tempsky]

Placeholder.

Tel is continuing to creep up - in anticipation of announcing it's capital repayment timetable and next dividend?

Tel/Paul Reynolds have been/are being very clever in terms of shifting most of the debt to Chorus (but it then has tax deductible interest payments) which is government backed, while Tel's network payments to Chorus are tax deductible as will be the interest payments on the extra debt they take on.
And don't forget that interest rates are very low now and will possibly go lower, a plus for both Chorus and Tel. And lots of tax deductible depreciation for Chorus and to a lesser extent Tel.
Roll on, baby!

[craic]

220 a few minutes ago and one buyer at least bought 1m or more shares. somebody out there wantsa slice or two of TEL. Same yesterday then it dropped back towards the end of the day.

[Major von Tempsky]

Despite big rises in overseas sharemarkets last night :-(

Wrong!

Last ASX quotes from Direct Broking are CNU $A 2.58 and TEL $A 1.70.

Check them out again 2moro afternoon.

Could be a welcome relief from whatever the latest stupid extreme radical Maori activists provocation is at Waitangi.
Wouldn't put it past one of them to punch John Key again or throw something at him or alternatively at Jerry Mataeparae the Gov-Gen.

Hey, here's a deal for Julia Gillard: we'll swap you our Maori radicals for all your boat people!

Boy, would we make on that deal!

[Major von Tempsky]

Next week, mes amis!
Friday no doubt :-)

[Major von Tempsky]

hmmm, not listed on this week's financial calendar.

However Goldman Sachs is quoted as saying that Chorus and Tel are rated as good buys :-)

[Major von Tempsky]

Finally, something authoritative from the Telecom Investor Centre

"Up Coming
Half Year Results Announcement
Friday 24th February 2012
10:00am (NZT)
Conference Centre, Level 2, Telecom Place, Auckland
".

[Major von Tempsky]

"Telecom New Zealand will announce its 2011/12 Half Year Results on Friday, 24

February 2012. Results will be released to the stock exchange at 08.30am (New

Zealand Time) and will also be available at this time on our internet site:
http://investor.telecom.co.nz/phoenix.zhtml?c=91956&p=irol-IRHome

Ooh- ah, that's 90 mins earlier.

[craic]

Anyone hazard a guess as to the Half-year dividend that they will announce? I reckon that it needs to be in the 14 - 20cps range to match past efforts. Share price shoud be up to 220cps by Friday?

[Major von Tempsky]

Maybe 220 on the share price but I think you are a bit optimistic on the dividend.

The Press sez 16.5 cps for the last year plus 6.69 imp creds. My recollection is 20cps for the last calendar year.

The're doing it half yearly now and Tel is now about a third smaller after stripping out Chorus, my guess, and I hope its on the conservative side, is about 8cps.

Delighted is someone can argue a higher figure with facts and reasons :-)

[Major von Tempsky]

Ok Craic me ol mate. 9cps fully imputed on 5th April (ex date 23rd March).
Not a bad result - well compared to Fletch anyway :-)
I'm still reading - heaps of stuff to read

http://phx.corporate-ir.net/phoenix.zhtml?c=91956&p=irol-QuarterlyLatest2012

[craic]

MVT Happy with the result, especially the fully inputted bit as that means a bit more back from the taxman later in the year. but I have a problem - my mail from Direct Broking is brief and finishes with the legend "See attachment" but there never is any attachment? Hunting around Tel Investor centre isn't much better. I know my machine accepts attachments because I get them from others? I see the price is hitting 218cps. I wonder how they intend to buy back 20m shares for up to $30m - I take it that the operative figure is the $30m and that's all, somewhere else they talk of a maximum expected purchase of 5m shares.

[Major von Tempsky]

Yeah there's always problems these days with different computers etc. My PC tells me its a suspicious URL & but allows me to override that. The Direct Broking website allows me to look at the 2 Buyback announcements but there's basically only a Contents page but no contents for the main announcement.

But don't blame TEL blame Direct, it's all there on the TEL Investorcentre site except that they've taken the Webcast off
now "until sometime soon". But all the other statements are there.

You could try signing up to the NZX website as I did earlier today and it may all be there.

Yep, it sounds like a very elastic buyback, I would have preferred a compulsory one and used the money to buy more TEL shares, but heigh-ho it will exert upward pressure on the TEL shareprice anyway.

[Major von Tempsky]

Anyone know anything of the antecedents, qualifications, experience, business acumen, age.... of "the industry's newest forecaster, IDC Research analyst Glen Saunders"? (today's Press p A7). Says he's "a former Telecom market intelligence manager".
Strikes me he knows rather less than the older ones and is thrashing around desperately looking for an angle, any angle.

Not a word about the developing capital return/what's to be announced in February.

Not a word about when 2degrees will achieve a profit or continuing sizeable capital injections required by 2 degrees.
And I thought the last data I saw showed that Vodafone is yielding market share.

Strikes me that "newest" may be a marketing degree grad with no technical or financial knowledge with a rather narrow marketing approach making a stir to get some personal exposure.

To be a "market forecaster" he needs to know and make comment on the other industry players not just chuck around stuff from Tel's old market research dept.

Ha! Ha! The famous Glen Saunders is the only one of 3 TEL analysts quoted by NZH today who refuses to say anything!
An admission?

[Major von Tempsky]

Not a bad report from NZH

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10787692

Ok, maybe I've got it in for the Honourable Glen Saunders but he burst into print from nowhere a month or two ago, thirsting to put the boot into TEL on a personal basis and without a word to say about the other players in the industry, the prospective capital repayment, the effects of the demerger....or in fact anything relevant.
PM Keith Holyoake had some sage words of advice for new MPs - "Breathe through your nose for the first year" he said.

[Animeart]

...I wonder how they intend to buy back 20m shares for up to $30m - I take it that the operative figure is the $30m and that's all, somewhere else they talk of a maximum expected purchase of 5m shares.

This can't be right. $30m for 20m shares so that's $1.50 per share!

[sharer]

This can't be right. $30m for 20m shares so that's $1.50 per share!
I thought the news said they were spending $300m on the buyback, didn't it?
I don't like buybacks. Money thrown away. Never saw the point of "rewarding" those who are selling out.
Rather get a special or bonus dividend, for those still holding shares. Or other schemes that favour the stayers, not the leavers.

[macduffy]

Well of course the theory is that the inherent value of the company now becomes spread among fewer shares, increasing the value of those remaining shares for the benefit of remaining shareholders. It works as long as the company continues to add value by being profitable, otherwise it's just another nice theory!

:cool:

[Major von Tempsky]

Hmmm, I aim to time my next TEL purchase for the day it becomes ex-div and hence 9cps cheaper :-)
Pigs don't appreciate pearls cast before them so I'll have some of their share(s).

[BIRMANBOY]

I'm buying now.....might as well get the dividend and also I am of the opinion that with the impending share buyback the price will gradually get pushed upward....buy on the dips and hold em forever.

[BIRMANBOY]

Nice to see one of the directors buying 10,000 shares. Murray Horn showing some faith and buying @2.145..lucky boy already made a profit..now at 2.20.

[Major von Tempsky]

On a morning in which Tel streaks away with a 7cps rise to 226 - .... it falls off the NZX page 1 discussion board because there is so little interest in ShareTrader in our second largest share.

Even McDunk has nothing to say....

[BIRMANBOY]

On a morning in which Tel streaks away with a 7cps rise to 226 - .... it falls off the NZX page 1 discussion board because there is so little interest in ShareTrader in our second largest share.

Even McDunk has nothing to say....

Its too boring for all the traders!!! They only have eyes for the long shots.

[Major von Tempsky]

Went up 8cps before the lily-livered Australian investors woke up for the day and collapsed in a heap and took it down to just a 6.5cps rise.

I reckon some broker like Forsyth Barr has produced a client sheet recommending it. Be interesting to know what it had to say.

Reliable much higher yielding dividends with imputation credits, capital growth prospects blah blah blah.

Usually one can find an investor who gets the relevant client sheet and will spill the beans. Anyone got it this time?

[Major von Tempsky]

Yesterday Telecom rose by 7.5 cents a share.

After searching by Google etc I couldn't find anything on this. Eventually, by searching through currency topics I found this

http://www.stuff.co.nz/business/market-data/currencies/6492377/Stocks-up-on-Goodman-Fielder-bid

Not a single mention of Telecom, our second largest share! Quoi?

TEL is officially an UNPERSON or rather an UNCOMPANY. It doesn't exist, it never has, it is not to be mentioned.
1984, Big Brother has spoken something somewhere but I'm not in the loop.
Verboten, Interdit, Taboo.

I went back to Direct Broking which temporarily saved my sanity. Yes, there is a share called Telecom NZ and yes it did rise 7.5 cents per share yesterday, but its a State Secret - don't tell anyone.

No doubt, according to Bloomberg, everyone will take fright today. There's been some hold up on the Greek debt deal and China has reduced its growth target from 8% a year to 7.5% a year.

Obviously this immediately and seriously impacts on Telecom NZs trading in NZ and it will plunge heavily.

Ok, I'm returning to reading Revelations under the bed until further notice. Until sanity breaks out somewhere, at least temporarily.

And unto the angel of the world economy and the NZ sharemarket write: Be watchful, and strengthen the things which remain (which excludes Tel NZ), that are ready to die; for I have not found thy works perfect before God. &.

[BIRMANBOY]

Yesterday Telecom rose by 7.5 cents a share.

After searching by Google etc I couldn't find anything on this. Eventually, by searching through currency topics I found this

http://www.stuff.co.nz/business/market-data/currencies/6492377/Stocks-up-on-Goodman-Fielder-bid

Not a single mention of Telecom, our second largest share! Quoi?

TEL is officially an UNPERSON or rather an UNCOMPANY. It doesn't exist, it never has, it is not to be mentioned.
1984, Big Brother has spoken something somewhere but I'm not in the loop.
Verboten, Interdit, Taboo.

I went back to Direct Broking which temporarily saved my sanity. Yes, there is a share called Telecom NZ and yes it did rise 7.5 cents per share yesterday, but its a State Secret - don't tell anyone.

No doubt, according to Bloomberg, everyone will take fright today. There's been some hold up on the Greek debt deal and China has reduced its growth target from 8% a year to 7.5% a year.

Obviously this immediately and seriously impacts on Telecom NZs trading in NZ and it will plunge heavily.

Ok, I'm returning to reading Revelations under the bed until further notice. Until sanity breaks out somewhere, at least temporarily.

And unto the angel of the world economy and the NZ sharemarket write: Be watchful, and strengthen the things which remain (which excludes Tel NZ), that are ready to die; for I have not found thy works perfect before God. &.
MVT shut up already..its now 2.30...keep it quiet... its doing a fine job and does not need you bringing any attention to it.

[Major von Tempsky]

Oops, sorry. Now up 4cps to $3.31 and Chorus up to no change on yesterday.

I did find a tiny little bit in today's Press "Forsyth Barr broker David Price said there was more money going to work in some of the leading Kiwi stocks, particularly Telecom".

How's that for a fine piece of sophisticated analysis? All is explained.

[blockhead]

In the headlines this morning Major...all is well !

Mint Asset Management equities manager Shane Solly said the New Zealand market stood well against the pressures that had been testing most markets today.

"Obviously Telecom is quite strong, up 2.2 per cent to $2.32. In the context of looking for a high quality high yield investment to protect themselves in difficult times Telecom ticks the box for investors"

[Major von Tempsky]

"Highest since 2008" they said on Radio NZ Midday News. Chorus highest ever.

237.5 and 344.

Anyone remember that guy McDunk (Duncan McGregor) of whom some on this Forum said "he's good at picking shares" advocating everyone should sell TEL at 220 Feb last year - and that was before the Chorus bonus issue!

[Snoopy]

Just wondered if anyone has been following this new 'Skinny' mobile brand? That is the one that Telecom has introduced to appeal to the youth market.

Have seen in shops of late the INQ Chat mobile handset. Apparently it was designed with integration into Facebook and Twitter in mind. Anyone have one of these?

A bit of Wiki research

http://en.wikipedia.org/wiki/INQ

leads me to the interesting information that INQ are a subsidiary of Hutchison Whampoa.

Hutchison Whampoa owns direct majority interests in the companies that operate the networks that are branded '3' in Australia through its majority ownership of Hutchison Telecom Australia Ltd (HTAL). IIRC Telecom still holds a stake in Hutchison Telecom Australia Ltd.

All very circular.

SNOOPY

[Major von Tempsky]

People just don't write about success here, do they?

Look at all the threads on the rest of page 1 :-0

I guess success is very boring.

Well folks, I tell you, I'm very happy to be bored to death.....

Read this for something more substantive :-) http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10791400

[craic]

I still can't find any explanation for the sudden rise. Usually an event of this magnitude is triggered by insiders who know of some impending disaster/success/takeover bid. I have been in Sydney for a week and knew nothing until friday when I looked at a PC in the hotel. I look up in the sky and cannot see any circling hawkes, just a few disinterested sparrows.

[Major von Tempsky]

I dunno Craic, you're a hard man to please!

First we had the quote above about TEL ticking all the boxes, then the NZH reference above and today in The Press a big article about TEL making its first big sale of UFB services to ENABLE of Chch.

You must be one of those people who feel guilty and apprehensive about good fortune and look furtively around to see where the next blow is coming from, I must be punished for doing well. Mea culpa, mea culpa....



"b) Number of securities acquired
200,000
c) Average consideration per security acquired
2.4000
d) Payment type
Cash Payment
e) Any amount paid up (if not in full) Not applicable
f) Percentage of total securities acquired
0.0104%
g) Reason for acquisition Return of surplus capital to shareholders ". Part of announcement today by TEL

$2.40! Anyway Craic maybe that's the factor you were looking for....

[craic]

I'm very easy to please - and the extra 6cps to 246 while I was in the RSA having a couple of rums today is even more pleasing. What is confusing me is the normal pattern of a few cents up followed by the profit-takers bringing it down to normal is not operating here. The new Swift I bought with my Chorus shares just on Christmas is beginning to look old and tired against the new 1.6 litre model.

[iceman]

I still can't find any explanation for the sudden rise. Usually an event of this magnitude is triggered by insiders who know of some impending disaster/success/takeover bid. I have been in Sydney for a week and knew nothing until friday when I looked at a PC in the hotel. I look up in the sky and cannot see any circling hawkes, just a few disinterested sparrows.

Craic, I think the huge share buyback of $ 300million is starting to be successful. Much better than a taxable dividend if you ask me. I am enjoying this ride with you and MVT and expecting increased dividends to come as well.

[craic]

If the buyback is responsible then Viva la buyback! So far since I left for Sydney ten days ago it has added about $13,000 to my capital wealth and that leaves any annual dividend I have ever had for dead. But I think that increased dividends, if they eventuate, will be modest. The great advantage TEL had when they controlled the physical network no longer exists for them and even chorus is facing a changing technology and the remnants will eventually look like a single ancient and lonely telegraph pole the sits drunkenly in one of my hilly paddocks. It was once a proud sentinel of the latest technology.

[Major von Tempsky]

The buyback rolls on :-)

Yesterday....Oh I believe in Yesterday...

b) Number of securities acquired
100,000
c) Average consideration per security acquired
2.4375
d) Payment type
Cash Payment
e) Any amount paid up (if not in full) Not applicable
f) Percentage of total securities acquired
0.0052%
g) Reason for acquisition
Return of surplus capital to shareholders

[Major von Tempsky]

Thu, Mar 15, MSN NZ, Money section.
"New Zealand shares rose, extending the NZX 50 Index's unbroken run through March as investors bought Telecom for its yield and bet on stocks tied to a return of global growth including Fisher & Paykel Appliances.

The NZX 50 gained 34.73 points, or about 1 per cent, to 3533.72, the highest close since early June last year.

Within the index, 29 stocks rose, 15 fell and six were unchanged.

Turnover was $161 million, second only to Wednesday in terms of value this year.

Telecom, which spun off its Chorus network business in November, rose 2.2 per cent to $2.53.

The stock hasn't fallen this month and has advanced 19 per cent this year. At Thursday's price it has a dividend yield of about 12 per cent."

(12%? Bit better than the interest rate on your bank deposit eh? I'd say that TEL still has the potential to double its price).

Chorus was unchanged at $3.62 and has gained 15 per cent this year.

"People around the world are continuing to seek yield and they have high yield," said James Lindsay, equities manager at Tyndall Investment Management.

"It has been a pretty solid start to the year all round with very solid support for a number of New Zealand names.

[Major von Tempsky]

Amusing and amazing to see speculators have a go at TEL the other day, they took it down by 3cps or so - temporarily.

Did they have more than $300 mill to bet against the TEL buyback fund? Did they owe heaps from shortselling TEL earlier so it was a desperation move?

Every exercise of the buyback fund pushes up TEL in two ways, the direct effect and the indirect effect that there are then less TEL shares to calculate the EBITDA, net profit and dividend against forcing up the TEL price anyway.

And what do they do with their money (assuming its not borrowed) when they get it back?

TEL is still the best yield and the best prospect on the market so the sensible thing would be to put it back in TEL again.

Its a one way bet up to 300cps.

Also astounded at the quote in the Sunday Star Times last weekend if you want a giggle. "A mean target price from 10 analysts sits at $2.36 while Telecom was last week trading at $2.38".

Elsewhere in the article it said "Deutsche Bank analysts believe the functional separation has left the company in an enviable position with an undergeared balance sheet at a time when its free cash flows are rising as its capital expenditure drops off from a cyclical peak in 2011. The company is also well positioned to take advantage of the smartphone and tablet explosion which is yet to fully take hold in NZ".

Hmmm. 10 idiot analysts who obviously didn't do their analysis, ignored the buyback and ignored that capital expenditure is now Chorus and the Government's responsibility. Maybe one was the hapless Glenn Saunders... They need to be named and shamed so we can avoid their recommendations. I'll look for Deutsche Bank recommendations first.

[Major von Tempsky]

Oh well, did my bit to support the future - bought a thou TEL at 239.

Seems to be a few who are flogging off their free Chorus to buy a new car, holiday.....tsk tsk, very self indulgent.

[macduffy]

On behalf of all TEL shareholders I'd like to propose a vote of thanks to the major for his single-handed efforts in promoting the TEL shareprice. I still hold a few, a legacy of the heady days when TEL was selling for a fair bit more than today's prices!

Well done, Major v T!

:)

[Major von Tempsky]

Thank you one and all :-)

And in case you were listening to the "analyst" skipping through the prices on the Business News on Radio NZ at midday, you may have heard him go "Telecom down 9.5cps, obviously has had a downgrade".

Just another illustration of the "analysts" the media constantly parade who don't bother doing their homework but blather off the tops of their heads.

In fact TEL went ex its 9cps dividend today and finished up a couple of cents above its theoretical ex-div price.

[Toulouse - Luzern]

Yes I heard a similar broadcast, no ex div comment, and had the same thought ...

[Major von Tempsky]

Very tricky business this buyback campaign, an art form like playing a trout I suppose.

You know your tackle (the buyback fund and target prices) wouldn't survive a full throated challenge by the overseas speculators and hedge funds or a massive overall global or national downturn so you play them carefully supporting the upturns and braking the downturns, but gently gently and secretly secretly - apart from the daily (not always daily!) buyback notice.

Eventually the speculators and hedge funds realise its a game they can't win and look for easier, smaller, less skilful prey.

Maybe I should go back and keep a total of how many shares bought so far and how much of the $300 mill spent so far. Fairly minor proportion at the mo :-)

[Animeart]

Not comfortable with the numbers released last week though...a lot of retailers not doing so well, and don't forget that after the separation it's the only game in town for TEL. Whereas Chorus had already locked up several year's worth of business TEL will have to compete with a lot of hungry upstarters. Didn't ORCON fired the first shot recently with their first UFB offering? Not sure how the cooling Euro and Chinese economy will impact on ours either..so rather take the wait and see approach for now.

[Major von Tempsky]

Bit debatable old chap.....are you comparing TEL with retailers generally such as Kathmandu?

Or just players in the telecoms industry?

Couple at least of the smaller telecoms players have had major reverses in the last few months, in fact I think one went down the drain. And another one had to admit that it had been hacking into TEL's customer database.
And Vodafone's had a couple of swingeing blows and it's in partnership anyway with TEL on a couple of major projects. Vodafone in Australia is getting seriously crunched.

Telecom has the major brand name, the history, the biggest team of sales and servicing agents and tie-ups with overseas technology developments.
TEL is a good place to sit as the investor fashion swings back from fixed interest to higher sustainable dividend yielders.

[bung5]

Bit debatable old chap.....are you comparing TEL with retailers generally such as Kathmandu?


Telecom has the major brand name, the history, the biggest team of sales and servicing agents and tie-ups with overseas technology developments.
TEL is a good place to sit as the investor fashion swings back from fixed interest to higher sustainable dividend yielders.


Have to agree with Animeart. Telecom has the big brand name that no-one likes. the bad history of ripping people off , lots of staff and middle management waste.
Telecom has been opened up to compete and will struggle to keep its current market share. At the very best it can keep its market share.

[CJ]

Have to agree with Animeart. Telecom has the big brand name that no-one likes. the bad history of ripping people off , lots of staff and middle management waste.
Telecom has been opened up to compete and will struggle to keep its current market share. At the very best it can keep its market share.Telecom has the great position (market share) of being number 1 but that also means there is only one way to go.

[Major von Tempsky]

You guys haven't been watching the ball or the scoreboard at reports time.
The number of employees and middle management has been dropping substantially with more to go, more cost cutting coming after already cutting lots.

Vodafone is number 1 in mobile phones - so I take it that means it has only one way to go? In fact 2 Degrees has been knocking off more of Vodafone's customers than of Telecoms....

Besides which, if Animeart had bought 5,000 TEL at $2.00 on 24 November 2011 (settled 29 Nov) when I did he'd now be sitting on a $2,200 capital gain plus a $450 tax free dividend on April 5. Plus 2 lots of 1,000 each since then, both well into profit.
Makes you think, really.
Instead of nursing your prejudices and "what everyone knows" as distinct from researching the reports.

[bung5]

You guys haven't been watching the ball or the scoreboard at reports time.
The number of employees and middle management has been dropping substantially with more to go, more cost cutting coming after already cutting lots.

Vodafone is number 1 in mobile phones - so I take it that means it has only one way to go? In fact 2 Degrees has been knocking off more of Vodafone's customers than of Telecoms....

Besides which, if Animeart had bought 5,000 TEL at $2.00 on 24 November 2011 (settled 29 Nov) when I did he'd now be sitting on a $2,200 capital gain plus a $450 tax free dividend on April 5. Plus 2 lots of 1,000 each since then, both well into profit.
Makes you think, really.
Instead of nursing your prejudices and "what everyone knows" as distinct from researching the reports.


6 months a very short time for investing .. unless you are trading TEL shares. How much Capital loss has there been in the last 5 years?

[Major von Tempsky]

I dunno, but on the media (Radio NZ and TVONE) when Telecom reached $2.49 they said (after adjusting for a large previous capital return, issues &, bonus Chorus) that Telecom "was the highest it had been for 8 years".
Suits me :-)

[bung5]

well is true that $2 has been returned in dividends in the last 8 years. but the shareprice has also gone from $5.60 to $3 (pre chorus split price) in the last 8 years.

So 10k shareholding would be worth 5.4k and 2.6k paid out in dividends

[BIRMANBOY]

Somewhat limited observation since holders now have chorus shares which cost them nothing and are worth 3.56 each plus the average share holder will probably not have an average buy price of 5.60...mine is 2.21 for example. Still why bother spoiling the story with the "reality". Its much easier to bag it from a position of not actually knowing anything.
well is true that $2 has been returned in dividends in the last 8 years. but the shareprice has also gone from $5.60 to $3 (pre chorus split price) in the last 8 years.

So 10k shareholding would be worth 5.4k and 2.6k paid out in dividends

[bung5]

Only commenting on 8 years as that was brought up by Major von. The shareprice factors in the chorus split as you got 1 share for every 5 telecom. which is roughly $3 if you sold them when issued at $3 . ($2.50 share price +50c for chorus) ( should be 60c)

My original comments were suggesting that telecom competitors will do better than they will in the long term. Short term will probably do OK with the nice dividends and share buy back.

[Major von Tempsky]

Bung5 - some careless research. You have ignored any number of factors to adjust for e.g. 5th Oct 2007 TEL shareholders had one in nine of their shares cancelled and a payment of $4.88 for that cancelled share - that's about 61 cents a share for a start.

The argument that because a company is the largest in its field then it will inevitably crash and burn is specious. Is that your prediction (ok maybe its more Animeart than you) for Fonterra? For Apple? For Fletcher in NZ construction? What about the British East India Company which lasted for hundreds of years before the British politicians did it down.

How do you define the "long term"? As Lord Maynard Keynes famously observed "in the long run we're all dead!"

I certainly won't be in Telecom in 8 years time but hey I'm going to enjoy the bull run while it lasts!

What I can't get my head around is all you guys who saw Telecom was making a capital return of $300 million (last results announcement) didn't look up the capital and see that amounted to at least 20cps and couldn't be bothered investing to get at least 20cps plus dividends and natural shareprice growth from TELs good ratios. Are you serious investors or just dilettante scribblers on the discussion board?

[macduffy]

Wow, major! You certainly know how to put the boot into us mere mortals!

Didn't we say we were sorry we didn't load up on TEL?

:ohmy:

[bung5]

The argument that because a company is the largest in its field then it will inevitably crash and burn is specious. Is that your prediction (ok maybe its more Animeart than you) for Fonterra? For Apple? For Fletcher in NZ construction? What about the British East India Company which lasted for hundreds of years before the British politicians did it down.




no, I'm just saying that for telecom.





What I can't get my head around is all you guys who saw Telecom was making a capital return of $300 million (last results announcement) didn't look up the capital and see that amounted to at least 20cps and couldn't be bothered investing to get at least 20cps plus dividends and natural shareprice growth from TELs good ratios. Are you serious investors or just dilettante scribblers on the discussion board?

PEN , DGR, CUE , NWE , CFE on the ASX are the reasons why.

[Major von Tempsky]

Hmmm, hmmm, I avoid overseas investments because the tax and bureaucratic regimes are too fierce and too changeable. Maybe if they allowed NZers to claim Australian imputation tax credits I'd be more interested.
I'm really in it for tax exempt dividends - slow and steady wins the race.
I have several hundred thou invested and I'm not willing to risk that on a greyhound which may have a nervous breakdown and blow up in my face. Any number of cases - RAK for example which I wisely stayed out of all along despite delirious sounds of enthusiasm from other punters further back. When will that pay a tax free dividend? (Hysterical laughter off)

[bung5]

agree they are two completely different risk profiles and investment strats . Seems you have done well out of telecom but I'm still not convinced on there long term sustainability at current market cap and dividend yield.

[jmsnz]

agree they are two completely different risk profiles and investment strats . Seems you have done well out of telecom but I'm still not convinced on there long term sustainability at current market cap and dividend yield.

Surely that depends on what you see as 'long term'. I have recently purchased TEL because:
- Attractive dividend yield
- Buy back likely to hold price up
- I perceived less risk post Chorus split off
- Regardless of individual brand perceptions they are still a 'blue chip' in terms of the NZX

Is it a 'long term' holding - well that depends. For me I would expect the current price will be held up for as long as the buy back is in progress, after that who knows what Mr Market will decide, so that is when I would expect to review my holding.

Interestingly, I thought the BB would hold the price, I didn't really expect that it would push it up as it has. That is actually a negative, as it means there will be more shares for future dividends to be distributed against, than if the BB was at a lower price.

Ultimatley I will hold for as long as I see my return from dividends and capital appreciation being appropriate. Right now I see nothing that suggests that won't be for 'some time' to come - that might not match you definition of 'long term'.

[craic]

Notification today that Blackrock Inv. Aust. are becoming substantial shareholders which seems to mean that they are confident enough to come in in spite of a price that may be inflated by the buyback. My portfolio page on direct broking tells me that my TEL shares have increased by 26.7% since I last bought them. Further records show that I bought and sold, or rather sold and bought them last in August last year, as I do from time to time when
i think that there is a bob to be made. None of this includes the heap of chorus shares that I sold to buy a car. I do not have the confidence to sell to buy back at the present time because TEL's history of high dividends will attract enough buyers in uncertain times to keep the price up. As to Chorus shares - I see the move as akin to the the transport company in 1930 who sold all their horses and bought trucks.

[Major von Tempsky]

"Telecom's board is expected to meet today to ratify Chris Quin as its next chief executive.

Quin, currently heads Telecom's Gen-i business unit. He declined to comment.

Quin, who was educated at Saint Patricks College, Silverstream, and Victoria University, is expected to be a popular choice internally and is believed to lean in favour of a rebranding of Telecom - a decision that would ultimately need to be made by Telecom's board.

Described by his colleagues as a hands-on and dynamic leader, he toured the country fronting up to business customers following Telecom's XT outage in 2010 and last year ran the New York Marathon for charity. "


http://www.stuff.co.nz/business/industries/6657710/Chris-Quin-tipped-as-new-Telecom-CEO

"Rebranding of Telecom"? maybe that cuts the ground out from under the feet of Animeart, Bung5 and others....

Gen-i has been one part of Telecom that has consistently overachieved over a number of years and I think it claims to be the largest IT provider (or some variation of that term) in NZ.

Roll on!

[Animeart]

I reckon TEL is so overpriced now, with everyone chasing yields, that I wouldn't touch it until it has proven itself after another year or two. When the new IPOs start coming onto the market later this year ie. Mighty River in mid-Sept, I'd expect people to start cashing out and invest in something else with more potential to growth ie. in terms of share price.

[craic]

I reckon TEL is so overpriced now, with everyone chasing yields, that I wouldn't touch it until it has proven itself after another year or two. When the new IPOs start coming onto the market later this year ie. Mighty River in mid-Sept, I'd expect people to start cashing out and invest in something else with more potential to growth ie. in terms of share price.
Most people on here have told you or given some good indication of what they have gained from TEL. My card shows about 20G over the past 12 months and that does not include the money I got from selling Chorus shares etc. You come in with a negative philosophy based on nothing more than what you think might happen. How about telling us what you have and what you have done so far to support your stance?

[Major von Tempsky]

Well said Craic.

Easy way is to look at the NZX sharetable published every day, particularly Saturday. Concentrate on the gross yield percent column, mark all the high ones and ask yourself, make it your business to find out, whether they are sustainable. I think you will find that TEL scores very well and CHORUS will score very well starting in August.

As for the new floats, mostly they are a disaster to invest in and Warren Buffett (consistently in the World's top 3 or 4 richest men) advises not to invest in new floats. Normally floats are made by entrepreneurs, promoters who have taken the best early profits and flog off their shares at too rich a price on the basis of a track record that is about to fall off.
Anybody remember EnergyMad, Rakon....the list goes on and on. You can tell whether Mighty River would be a good float by looking at their prospective gross dividend when that comes out, certainly they won't be fast or even moderate growth propositions.

As for me I'm sitting tight in TEL, Chorus and a few like shares :-)

[foodee]

I reckon TEL is so overpriced now, with everyone chasing yields, that I wouldn't touch it until it has proven itself after another year or two. When the new IPOs start coming onto the market later this year ie. Mighty River in mid-Sept, I'd expect people to start cashing out and invest in something else with more potential to growth ie. in terms of share price.

:confused:

TEL PE 5.9 Yield 9+% [from Direct Broking]

[macduffy]

As for the new floats, mostly they are a disaster to invest in and Warren Buffett (consistently in the World's top 3 or 4 richest men) advises not to invest in new floats. Normally floats are made by entrepreneurs, promoters who have taken the best early profits and flog off their shares at too rich a price on the basis of a track record that is about to fall off.


Certainly true for the current NZ market where listing of established, well-performing companies is a rarity. Wasn't always the case though and there have been times in the past when participating in (some) new issues has been almost a licence to print money - the original TEL float, for example was a great money spinner - and not only for the big foreign shareholders! It's unlikely though that these times will return in the near future although that depends on how keen the govt is to ensure that the forthcoming partial privatisations are a big success!

[voltage]

Interesting comments, sold out of telecom a long time ago. After reading this thread and looking at their dividend yield interested to buy some shares. Bought a new phone the other day and was amazed at how busy the telecom shops are. Any advice who is the better but out of chorus or telecom?

[Major von Tempsky]

Great Scott! No buyback last Friday. Well that gives the lie to those who say its just the buyback raising TEL's price and keeping it there.

As for which is better TEL or Chorus, that's the $64,000 question that won't be answered until August, CNU's first announcement.

On the one hand CNU is sort of Government guaranteed and funded but on the other it's success depends on the uptake of UFB and further down the track there are the opportunities for Government to take concessional share issues which will dilute the shares and may weaken the price.

TEL is giving a good impression of going great guns now it's free of it's continual harassment by government worries.

I'm in both with a substantial stake :-)

[ananda77]

TEL is giving a good impression of going great guns now


...Major surely happy with the deals Telecom dishing out:

-Nokia Lumia $0 down on $80-plan
-iphone 4S $0 down on $100-plan (generous plans too)

...unbelievable, and they are signing up customers by the meter

Kind Regards

[Major von Tempsky]

...Major surely happy with the deals Telecom dishing out:

-Nokia Lumia $0 down on $80-plan
-iphone 4S $0 down on $100-plan (generous plans too)

...unbelievable, and they are signing up customers by the meter

Kind Regards

Always try to look on the bright side myself......but I thought I read very recently that Nokia was indefinitely suspending Lumia because of software problems? Maybe an earlier/later model situation.
Doesn't seem to be any Buyback announcement re yesterday indicating some strength in TEL and the Yanks Dow etc going great guns overnight.

cheers,

le Commandant

[ananda77]

...tested the Lumia, its a very fast, sleek, handsome cell, but just does not load websites correctly. Leaves out graphs for example and appears to display websites unfit to the cell display. Not sure what the problem is as no expert. So had to give it a miss.

...the iphone 4S on the other hand, its just a superb cell, very fast, very clear display, highly organized, just a pleasure to work with...and for $0 down on a $100-plan - Thank You Telecom-

...leaves all competitors right stuck in the starting blocks

Kind Regards

[Major von Tempsky]

NZ $ up over a cent US at today midday over yesterday. TEL down 4cps. Go figure.

But Fletcher up 7cps. I wonder why the currency speculators don't have a go at Fletch as well or instead?

Although I did read somewhere recently that TEL is now our largest share again - I suppose TEL's price vs Fletcher's decline has brought that about.

[Major von Tempsky]

Well since TEL allegedly half own Southern Cross cable I guess this should go in the TEL thread....

http://www.nbr.co.nz/article/souther...band-ck-107901

This, from the NBR today, is rather more optimistic (and disagrees with Buns, but hey I'm not looking for an argument :-) )
They also announced a 44% price cut which rather undermines the economic rationale for Pacific Fibre. Good to see someone fighting back rather than just lying back and allowing themselves to get trampled over.

......"Southern Cross announced a capacity boost, and plans for a 100 gigabit/sec upgrade by December (that’s a very, very, very fast speed – but also academic, given your ISP will only buy a small slice of capacity, largely dictated by price).

As ever, there’s no doubt, on a technical level, that Southern Cross can carry all the broadband data that New Zealand internet users can throw at it – and likely continue to as the Ultrafast Broadband (UFB) roll-out brings faster fibre connections to homes and businesses over the next decade. The key benefit of the Pacific Fibre (Sydney-Auckland-LA) and Axin/Huawei cables (Sydney-Auckland) will be to provide more price competition.
"
If they go ahead in two years time.... ;-)

[Major von Tempsky]

Announcement this morning - Simon Moutter, CEO Auck Internat Airport, appointed CEO TEL from from 1 Sept 2012.

Opinions? Comments?

[Balance]

Announcement this morning - Simon Moutter, CEO Auck Internat Airport, appointed CEO TEL from from 1 Sept 2012.

Opinions? Comments?

Simon is the wrong man for the job - he has experience only in running monopolies - Telecom and AIA.

Frightening to think that HE is Teresa's hand-picked loser! Oops - successor.

Look at Deane and Teresa - both fought tooth and nail to maintain Telecom's monopoly status to rip off New Zealanders, and completely stuffed up Telecom's long term future :

1. Loaded up Telecom with ever mounting debt by excessive pandering to the Americans,

2. Made monstrously disastrous investment decisions - CDMA and AAPT, and

3. Left Telecom with a third world infrastructure. Just think what the $3 billion lost in Australia could have given Telecom and NZ in communication infrastructure.

So it's goodbye, Telecom.

[Major von Tempsky]

Sharemarket doesn't seem to agree with you Balance me old mate :-)

[karen1]

The old adage about not going backwards (Simon returning to TEL) is ringing in my mind, but only time will tell. He certainly has a following, and admiration from the likes of Joan Withers, AIA chair, noting that "He has also built a talented and dedicated team of senior management who have consistently focused on achieving commercial strategies to deliver on the Airport's "Flight Plan to Growth".

"For shareholders this has delivered solid returns during a period of unprecedented global market upheaval and provided excellent value to passengers, business partners and New Zealand."
(http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10800837)

Further commentary at http://www.nbr.co.nz/article/theresa-gattungs-right-hand-man-lead-telecom-ck-117332

[Balance]

Sharemarket doesn't seem to agree with you Balance me old mate :-)

That's okay, matey.

I am used to the market disagreeing with me.

Heck, I even enjoy the abuse and insinuations thrown in my direction when I take on the likes of the Pikers and Noggers. So much more satisfying when I am proven so right later.

Not that they would ever admit that they are wrong!

[Balance]

The old adage about not going backwards (Simon returning to TEL) is ringing in my mind, but only time will tell. He certainly has a following, and admiration from the likes of Joan Withers, AIA chair, noting that "He has also built a talented and dedicated team of senior management who have consistently focused on achieving commercial strategies to deliver on the Airport's "Flight Plan to Growth".

"For shareholders this has delivered solid returns during a period of unprecedented global market upheaval and provided excellent value to passengers, business partners and New Zealand."
(http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10800837)

Further commentary at http://www.nbr.co.nz/article/theresa-gattungs-right-hand-man-lead-telecom-ck-117332

It is so tough, isn't it, running a monopoly? There's all that lobbying, bullshxting, wining and dining which have to be done to preserve the monopoly status and favorable regulatory framework.

But we saw what can go wrong when Helen Clark went to Korea and found out for herself that fellow female, Teresa, had hoodwinked her about the state of broadband in NZ.

They could download a movie there in 5 minutes while it took a whole day (if at all possible) in NZ - and that was in 2006!

Stroke of a pen by Helen and Telecom's sp went into free fall. Bye bye monopoly.

Well, Simon has been living in an air-con weather controlled very pleasant environment. Will he be able to stand the heat?

Well, that's Simon's background - mark my words.

[craic]

Balance, tell us what you would DO,not what you wouldn't do - how about how much you have made being right and keeping away from TEl instead of a lot of gabble about people you don't like? You are beginning to sound like a string of past and present Labour Party leaders.

[Balance]

Balance, tell us what you would DO,not what you wouldn't do - how about how much you have made being right and keeping away from TEl instead of a lot of gabble about people you don't like? You are beginning to sound like a string of past and present Labour Party leaders.

Eh - one way to start making money is NOT to make the wrong investment decision in the first place. So not investing in Telecom with one of the 3 clowns (Rod, Teresa and Simon) back in charge is a start.

Second is to short it if you have courage of conviction.

Third is to invest in another that you can make money of.

CNU looks much much better to me - they are singing from the same song sheet as the government.

[Major von Tempsky]

Well, up 3.5cps for TEL and down half a cent per share for AIA says the market agrees with the commentator on TV's business news at lunch time that its a good appointment for TEL and a loss to Auck International Airport.

I was never happy with Theresa Gattung as CEO, her qualification was in Political Science! Ha! Ha! Ha! Ha! Rolls around laughing. Talk about totally irrelevant.

When I was at Varsity Pol Sci was known as the easiest qual to get and students used to joke that you cut coupons out of a Weetbix packet and sent them in and ended up with a Pol Sci degree. She lost her head trying to take the government on which is a game an individual firm can't win (as Sol Whatisname at Telstra in Oz also found). Rod Deane is also to blame for not reining Theresa in and disposing of her earlier.

But why Simon Moutter is to blame for this - here the train of Balance's logic train(?) deserts me.
Is everyone who worked at TEL while Theresa Gattung was there also to blame by association? Maybe we should fire 95% of the staff for guilt by association....

As always I'll take the win and back the winner as long as he delivers :-).

[Zaphod]

2. Made monstrously disastrous investment decisions - CDMA and AAPT, and


To be fair, at the time CDMA probably seemed like the best choice. CDMA had many technological advantages over GSM/EDGE at the time, and had a much greater range of handsets available - two things that a Telco embarking on a major new rollout requires.

The issues surrounding the matter are very much equivalent to the BETAMAX v VHS, or DVD-R v DVD+R debates.



3. Left Telecom with a third world infrastructure. Just think what the $3 billion lost in Australia could have given Telecom and NZ in communication infrastructure.


What specifically, would do describe as third world about the infrastructure?

[Zaphod]

Announcement this morning - Simon Moutter, CEO Auck Internat Airport, appointed CEO TEL from from 1 Sept 2012.

Opinions? Comments?

He is exceptionally focused (particularly on cost cutting), determined and a very cut-throat operator.

[Balance]

To be fair, at the time CDMA probably seemed like the best choice. CDMA had many technological advantages over GSM/EDGE at the time, and had a much greater range of handsets available - two things that a Telco embarking on a major new rollout requires.

The issues surrounding the matter are very much equivalent to the BETAMAX v VHS, or DVD-R v DVD+R debates.



What specifically, would do describe as third world about the infrastructure?


1. GSM won - Telecom picked the wrong format. Nothing fair about it - it's all about making right decisions. Next you will be saying that investing $3 billion in AAPT and Australia was at that time, to be fair, a good decision!

2. Third world infrastructure? Well, where do I start?

Simple answer - have you been to Asia in recent years? Korea, Japan, Hong Kong, China especially Shanghai and Beijing or Singapore? Have you tried their mobile and broadband? Well, you should - then, you will come back to NZ and weep at how NZ is so third world.


I personally know of several software companies whose development and support services have set up in India and China because of their first world broadband. And no, it's not because of their cheap labor.

[Balance]

He is exceptionally focused (particularly on cost cutting), determined and a very cut-throat operator.

And at Telecom, he cut Telecom's throat when he was Teresa Gattung's right hand stooge - lousy service and low staff morale.

[craic]

I have a Senior Architect, Market Data Systems, Bank of America, in my family and he uses my TEl home PC to do his work when he is home in NZ - he would disagree with your assessment of TEL systems. He is used to British telecom and US telecom normally. Have you tried to make a telephone call in Bankok lately? Walk down any street and look at the overhead copper and you will know why. Walk over some of their street overpasses and put your hand on the rails and feel the wires under your fingerstied to the side. I bought my first new car in December Tel have now returned the full price on capital gains so far, and I have not included the dividend from last month.

[Balance]

I have a Senior Architect, Market Data Systems, Bank of America, in my family and he uses my TEl home PC to do his work when he is home in NZ - he would disagree with your assessment of TEL systems. He is used to British telecom and US telecom normally. Have you tried to make a telephone call in Bankok lately? Walk down any street and look at the overhead copper and you will know why. Walk over some of their street overpasses and put your hand on the rails and feel the wires under your fingerstied to the side. I bought my first new car in December Tel have now returned the full price on capital gains so far, and I have not included the dividend from last month.

Talk to those who bought Telecom 3 to 10 years ago - they are still sucking on the lemon.

Bangkok tel infrastructure is not first world - it is third world like NZ.

Sorry to read that your family and you have such low expectations.

[BIRMANBOY]

Interesting that some folk have wholeheartedly embraced the adage "once bitten, twice shy". I guess it goes to show that in buying shares in a solid performing company like TEl some people have no real faith or staying power. Its all in the timing some say..others say its not the timing but the "time in the market". If those people who "sucked the lemon" had kept buying regularly then they would have been rewarded by an average share cost a lot lower and also benefited from a consistantly strong dividend stream and of course the free Chorus handout. I admit it takes a strong constitution to keep buying on a downward trend but if the company in question is a "blue chip" like Telecom I think it deserves a different view than some spec mining outfit.
Regards NZ being third world...what do we expect with such a small population base,and a minute export economy. I think its impractical and unrealistic to expect anything else. Its the best "third world" country I've ever experienced. "Third World" probably should be re-defined....I see it as middle of the heap with places like many African countries being pushed down to 4th or even 5th world.


=Balance;372908]Talk to those who bought Telecom 3 to 10 years ago - they are still sucking on the lemon.

it is third world like NZ.

.
Last edited by Balance; Today at 10:38 AM.

[POSSUM THE CAT]

Balance & Birmaboy have bought TEL shares from mid 2008 one of the best shares I have owned. Rather than sucking on a lemon have had some one feeding me with a Golden Spoon

[Major von Tempsky]

Up 9cps a share so far today to $2.64.....what's that if it's not a ringing endorsement of Simon Moutter?
I think when they get to $2.67 from memory we can count Chorus (one for five) as a totally bonus issue.

Where's Duncan McGregor who was seriously advising everyone in Feb last year to sell now at $2.20?

[Balance]

Balance & Birmaboy have bought TEL shares from mid 2008 one of the best shares I have owned. Rather than sucking on a lemon have had some one feeding me with a Golden Spoon

Well done and wish that you continue to do well.

I just wonder how many shareholders are still sitting on horrendous losses though?

I am happy with my Diligent shares. Now that's one where everyone is making profits!

[BIRMANBOY]

Balance & Birmaboy have bought TEL shares from mid 2008 one of the best shares I have owned. Rather than sucking on a lemon have had some one feeding me with a Golden Spoon

Bit loose with your facts there Possum?...or are you missing an "I" or two? I have been buying from 2010 so seem to have missed out on the higher buy prices. However that is totally due to good luck rather than any real in depth knowledge. My point is that I buy regularly in the dips and when funds get free and my average cost is sitting at 2.14. If I had stopped buying when it dropped from my high buy price of 2.41 then I would be poorer for that "rash" decision. Unlike some of the "searchers for the Holy Grail in one hit", my approach is tortoise like.

[Hoop]

Up 9cps a share so far today to $2.64.....what's that if it's not a ringing endorsement of Simon Moutter?
I think when they get to $2.67 from memory we can count Chorus (one for five) as a totally bonus issue.

Where's Duncan McGregor who was seriously advising everyone in Feb last year to sell now at $2.20?

Hmmm ..telecommunication companies seem to be in favour atm ....Telstra up +2.1% on a flat (+0.1%)All Ords Market

[POSSUM THE CAT]

Birmaboy Note I said from 2008 & like you I am a tortoise. I buy slowly & carefully with approximately A 10% dividend yield

[voltage]

would you buy at these prices now, how does telecom look now going forward. All I notice is that their shops are very busy.

[Major von Tempsky]

would you buy at these prices now, how does telecom look now going forward. All I notice is that their shops are very busy.

Normally I wouldn't but these are not normal times.

What's abnormal is that inflation has collapsed in a heap and interest rates on deposits will now collapse in a heap as well.

So that whereas before one bought TEL because it had a gross yield of 10% vs deposit interest of say 5% and inflation of 2.5%, now/in the future one will buy TEL at 6.4% (current) gross yield vs deposit interest of 2% and inflation at 0.5%.

Clip that out, put it in your bottom drawer and have another look in 6 months time :-)

[Snoopy]

Interesting that some folk have wholeheartedly embraced the adage "once bitten, twice shy". I guess it goes to show that in buying shares in a solid performing company like TEL some people have no real faith or staying power. Its all in the timing some say..others say its not the timing but the "time in the market". If those people who "sucked the lemon" had kept buying regularly then they would have been rewarded by an average share cost a lot lower and also benefited from a consistantly strong dividend stream and of course the free Chorus handout. I admit it takes a strong constitution to keep buying on a downward trend but if the company in question is a "blue chip" like Telecom I think it deserves a different view than some spec mining outfit.


While I am in broad agreement with Birmanboy on Telecom, as someone who was there through all the troubles I don't have any 'told you so' attitude to being a continuing holder. I find being wise with the benefit of history is easy.

Telecoms dividend stream was never cut off, BUT the dividend was very substantially cut following the dropping of the governments 'local loop unbundling' commerce bomb. TG once said that LLU would cut 30c of value from the Telecom share price. Even if the true value lost was twice that, the drop in share price far exceeded the drop in true value. Nevertheless there was an underlying real and permanent loss for TEL shareholders courtesy of the shift in government policy.

Chorus was not a free handout. It was a repackaging of existing assets from one box into two. I am not a buyer of either TEL or CNU right now (but I am not a seller either) because I don't sense any extreme value bias in their respective sharemarket valuations. But I certainly bought many TEL shares post LLU at what history has shown to be not optimal but very reasonable prices.

For the record I almost always buy in a downtrend from the traders perspective. However because I am not a trader I do not think in terms of trends. If you hold a share through several business cycles all trends simply become trading noise. I get good cashflows from my dividend streams so have no need to sell at all, ever. And if I only invest in good businesses then my aim should be to stay invested rather than 'sell out' and risk getting ravaged by the inflation dog. As long as I buy my (telecom) shares cheaply enough the 'market weighing machine valuation' will eventually kick in, even if I have to wait for several year of 'market voting machine' trends to die out.

One off finance bomb effects are real and permanent. If the lemon must be sucked, as it was for pre LLU TEL holders, best to focus on the future rather than brood on citric regret and lose the future investment opportunity.

SNOOPY

[jonu]

Nice post Snoop

[BIRMANBOY]

While I am in broad agreement with Birmanboy on Telecom, as someone who was there through all the troubles I don't have any 'told you so' attitude to being a continuing holder. I find being wise with the benefit of history is easy.

Telecoms dividend stream was never cut off, BUT the dividend was very substantially cut following the dropping of the governments 'local loop unbundling' commerce bomb. TG once said that LLU would cut 30c of value from the Telecom share price. Even if the true value lost was twice that, the drop in share price far exceeded the drop in true value. Nevertheless there was an underlying real and permanent loss for TEL shareholders courtesy of the shift in government policy.

Chorus was not a free handout. It was a repackaging of existing assets from one box into two. I am not a buyer of either TEL or CNU right now (but I am not a seller either) because I don't sense any extreme value bias in their respective sharemarket valuations. But I certainly bought many TEL shares post LLU at what history has shown to be not optimal but very reasonable prices.

For the record I almost always buy in a downtrend from the traders perspective. However because I am not a trader I do not think in terms of trends. If you hold a share through several business cycles all trends simply become trading noise. I get good cashflows from my dividend streams so have no need to sell at all, ever. And if I only invest in good businesses then my aim should be to stay invested rather than 'sell out' and risk getting ravaged by the inflation dog. As long as I buy my (telecom) shares cheaply enough the 'market weighing machine valuation' will eventually kick in, even if I have to wait for several year of 'market voting machine' trends to die out.

One off finance bomb effects are real and permanent. If the lemon must be sucked, as it was for pre LLU TEL holders, best to focus on the future rather than brood on citric regret and lose the future investment opportunity.

SNOOPY

As I mentioned I was lucky enough to start buying when the price was well down (2.41) so missed out on the higher prices pre LLU. For me my Chorus shares are a "freebie" since my pre chorus average cost price has long been exceeded by current share price. Technically it may not be free but for all intents and purposes it most definitely is. I agree regards everything else. Citrus reflux is smoothed by a patient and pragmatic buy and hold approach and can be reversed in many cases by buying when everyone else is "running for the hills". I Certainly was not trying to be a "told you so" bore. Someone previously (Balance?) was saying that TEL had many detractors who had been burnt by a drop off in share prices from before. My point was that if these people had taken a longer term view and seen the dropping share price as an opportunity not a disaster then the "sucking of the proverbial lemon" would have been made less onerous. All up to the individual. Everyone has a different share philosophy but in the long run we all benefit by being exposed to different ideas. Young guns tend to morph into old farts over a period of time!

[Zaphod]

Simple answer - have you been to Asia in recent years? Korea, Japan, Hong Kong, China especially Shanghai and Beijing or Singapore? Have you tried their mobile and broadband? Well, you should - then, you will come back to NZ and weep at how NZ is so third world.


I personally know of several software companies whose development and support services have set up in India and China because of their first world broadband. And no, it's not because of their cheap labor.

Yes I have been to Asia in recent years, and the bandwidth of broadband is generally higher in South Korea, Japan, and Hong Kong and parts of major urban Chinese cities, but specifying a list of a handful of countries with faster broadband services deployed under state-control and with high population densities not make the sparsely populated country of New Zealand a so-called 'third world' country when it comes to broadband. For example, South Korea's pre-eminence in the broadband world is owed to state intervention (just as NZ is enjoying now), not through altruistic behaviour from Teleco's.

Telecom could have invested much more fiercely in broadband, and for the good of the nation they should have, but what was the incentive? Would Telecom investors have been happy to foot the bill for the massive capital expenditure required to voluntarily roll out fibre (or even VDLS2/other technologies) quickly to the nation, with little hope of increased revenue streams? Somehow I doubt it.

[craic]

Telecom price is down a way? What am I missing. What is the situation with the share buyback - how far into the process are they? I would expect the price to drop when they get out of the market

[Major von Tempsky]

If u have a look at the TEL's Buyback notices you'll see that the highest and last was at 249.5 cps so don't expect any support before that is reached :-)

Belge is right - rather more than half of TEL is owned overseas and used as a proxy to speculate in the NZ dollar which is as Belge says, tanking.

Also no doubt a certain amount of ignorant and stupid linking with Chorus which doesn't hold.

National now has a problem it will have to address: after the shabby treatment meted out to first Telecom and now Chorus by successive governments and ComCom it's going to be a very sceptical investing public eyeing the 5 floats National is so desperate to get away to please the IMF and help the Budget.

I was interested in getting a slice of Mighty River but I'm not now, I wouldn't touch it with a 40 foot barge pole and I predict neither will other investors including overseas ones until the Government fixes the Chorus ComCom problem and future ComCom problems in advance for the power companies.

The floats are going to go down like lead balloons. The Labour Party can relax.

[Major von Tempsky]

I note that the level at which TEL is operating its $300 mill buyback program has raised from 249.5 to 252.2 average (400,000 shares).
I think this was a buy signal to the market today :-)
Any other theories?

[craic]

The arse is about to fall off the Euro - the socialists are backing off the hard decisions. If you had cash in Europe now would you not look for a safer place like NZ telecom or others.

[Silverlight]

The arse is about to fall off the Euro - the socialists are backing off the hard decisions. If you had cash in Europe now would you not look for a safer place like NZ telecom or others.

Depends what you think safer means? If I have shares in Nestle and their shares sell off 20% while euro markets tank then chances are the NZD will sell off 20% too, any the shares I own in my international food business are still worth exactly the same in NZ dollars.

[craic]

The french have taken a giant step to the left and austerity measures are to go on hold as they march, lemming like to the edge of the cliff. The Greeks are unable to form a government according to todays news for exactly the same reason. There will be many european investors looking to hide their money away from the debacle that is the European Union and Telecom and companies like that in this stable area will benefit. Commodity prices are a different ballgame. Once again we are gross producers of food and materials -dairy, timber, wool and others and the customers are out there. I think TEL and some other will continue to thrive with minor glitches.

[Major von Tempsky]

It's like watching a blood sport with Greece. They have an insoluble dilemma. They have to come up with a plan by the end of May of future cuts to satisfy the EU and if they don't then no more bailout and most of their debts become due immediately. Bankruptcy, financial collapse, falling out of the euro, mass unemployment. Perhaps they'll go for the same solution as the Weimar Republic did (Hitler and the Nazis), luckily they are not big enough to successfully invade anyone except Albania, Macedonia and Montenegro.

So, do the left wing anti-austerity parties (and the right wing anti austerity New Dawn Party) continue to block a rescue plan and precipitate something much worse than the situation they are in now or do some of them front up like men, take their medicine and eat their words?
(a situation I'd love to see the NZ Labour Party and Greens in :-)).

[Major von Tempsky]

TEL's Buyback notice for yesterday has just appeared.

500,000 shares at $2.56.

But with more blood on the floor on overseas exchanges last night it will be interesting to see what happens - when Greek meets Greek!

The inexorable downward movement from overseas comes up against the $300 million power of the TEL juggernaut.

I think the downward move will be too strong and TEL will resort to guerilla warfare, a skirmish to test the enemy then a retreat to a more discreet lower buyback price.

Must say its heartening to know TEL shares are becoming more valuable everyday as TEL buys substantial numbers and cancels them!

[craic]

I told you so!

[Major von Tempsky]

Hmmm, I see the Dow etc have fallen by 1% or so overnight and European indexes by about 2% and that Greek left wing idiot Tsipras is now on course to lead Greece into bankruptcy and chaos.

But as a humble TEL holder who has now (yesterday) completed his TEL buying program so I am now stuffed to the gunwales with TEL shares, u wouldn't believe how many I have :-) I can see adavantages in that.

What I need now is a fall in TEL (about 13cps?) sufficient to trigger the renewal of the TEL $300 mill buyback so all that gets used up and there are significantly fewer shares to divide the the profit and dividends between.

McDunk (Duncan McGregor) where are you now? I need you to come back and spread fear, pessimism and despondency to lower the share price :-)

[Major von Tempsky]

Ok guys, while sitting around waiting for the Greek economy to totally collapse followed by the Spanish, Portuguese, Italian and Irish ones, I thought I'd amuse myself by adding up all the TEL buyback announcements this year, excluding the Dividend Replacement Program ones which mops up shares issued in lieu of cash dividends.

The result is - $56.296 million spent, and 22,797,000 shares acquired and cancelled. That gives a weighted average buyback price of $2.469 todate.

Therefore there's nearly $250 million to go in the buyback program this calendar year - plenty of firepower left.

Must be a funny feeling selling TEL knowing that the intrinsic worth of the remaining shares is going up as a result and logically all the shares sold after your sale should be at a higher price :-)

[Major von Tempsky]

Update on the TEL buyback which you recall intended to spend up to $300 mill over the next year.

Up to and including yesterday, by my arithmetic, TEL had spent $77.396 mill to buy 31,051,000 shares (slightly rounded) at an average consideration of $2.4925.

[Jim]

So by the time Tel finished the buy back the share price be around $3 ???

[Major von Tempsky]

We think so Jim :-)

Looks like there have been some absolutely cash desperate players in Oz today.
NZX up 11, ASX down 40.

TEL went up to 262 then down to 256.5 when the ASX opened.

Maybe we get to see who in some liquidation/receivership media item from Oz ;-). Bad idea to buy on margin/leverage you Aussie players. 1987 and 2001 and the GFC should have taught you that.

[sharer]

Old story revived for another run: What if Telstra decided to take over TEL ??

http://www.stuff.co.nz/business/industries/7026357/Breakup-buzz-in-Reynolds-wake

[craic]

Any suggestions as to how much any offer per share is likely to be? They would have to convince the major shareholders, the Australian banks, to part with this cash cow that returns about 10% per annum. So the basic minimum would have to be the share price, say 265cps plus a multiple or two of the annual return, say 60cps in total for earnings. That is 330cps or thereabouts and I still think that they would struggle.

[Major von Tempsky]

Actually, given that Telstra is up 9cps for the day and 11cps for the week and TEL is down 4cps for the day and 2cps for the week, a more credible rumour would be that TEL is about to launch a takeover for Telstra ;-).

[Major von Tempsky]

Aha! Told you it was more like an attempted takeover of Telstra :-)

But in fact its Vodafone trying to take over Telstra-Clear NZ.

Now if CommComm weren't hopelessly biassed against TEL and CNU they would say No!

Hopefully the fall today in TEL is enough to spark the renewal of the TEL Buyback action....

[BIRMANBOY]

About time the non -committed shareholders got nervous and started dumping. Gives me an opportunity to add more to the holdings....big question of course is when..At what point is the reversal coming? Thoughts?

[sharer]

About time the non -committed shareholders got nervous and started dumping. Gives me an opportunity to add more to the holdings....big question of course is when..At what point is the reversal coming? Thoughts?

About now is a possible temptation (243) ...

[Major von Tempsky]

Most of TEL's shares are held overseas......looks they incude some financially distressed ones today ;-)

Keep this up and with the buyback and we might get majority shareholding back in NZ...

[BIRMANBOY]

About now is a possible temptation (243) ...

You could be right...seems to be more volume on buyers side and selllers looking patchy..will be interesting to see if Tel leap in tomorrow with the buyback..although may have already pounced...lot of big transactions right on close. Could shoot up quickly.

[Snow Leopard]

Aha! Told you it was more like an attempted takeover of Telstra :-)

But in fact its Vodafone trying to take over Telstra-Clear NZ.

Now if CommComm weren't hopelessly biassed against TEL and CNU they would say No!

Hopefully the fall today in TEL is enough to spark the renewal of the TEL Buyback action....

Bit of speculation here at Stuff.co.nz (http://www.stuff.co.nz/business/industries/7055004/Telco-job-cuts-tipped-in-takeover-bid) that the possible Telstra-Clear sale is a precursor to a Telstra Oz buy of Telecom Nz

Now that would be fun.

best wishes
Paper Tiger

[POSSUM THE CAT]

Paper Tiger have Telstra got deep enough pockets. They could have some very strong competition from Optus, Singtel.

[macduffy]

Telstra - MCap $45.5 billion.

Yes, I reckon they could whistle up the necessary if they really wanted to!

:cool:

[POSSUM THE CAT]

Macduffy How much of this is still in Govt. hands

[macduffy]

Macduffy How much of this is still in Govt. hands

No idea, but the Future Fund of Australia (ie the Govt) ceased to be a significant shareholder in March 2011. I havn't seen any notice since to indicate otherwise but I don't monitor the company closely.

Cheers

[Major von Tempsky]

Doing a Google search on Telstra taking over TEL brings up quite a number of rather persuasive articles, not all of which I have read yet. There was one very good one in The Press today which doesn't come up on the Google search yet, "Buying Telecom on Telstra's Mind" by Tom Pullar-Strecker of Brisbane.
In it he points out that Telecom's technology is extremely compatible with Telstra's to the point that Telstra could run TEL with just half the number of people. But he also points out that Telstra would not be allowed by CommComm to buy Telecom while it still owned and operated Telstra-Clear so that Telstra's real problem is how to get rid of Telstra-Clear and that it's probably prepared to practically give it away for a song or find some other way of disposing of it - floating it cheaply? Sale to private equity?

So, analysts and the market here are barking up the wrong tree - the proper reaction is not fear of an overpowering Telstra-Clear/Vodafone but buying into TEL while its still cheap in anticipation of a coming takeover.
He also notes that Telstra-Clear has just barely broken even/made a small profit for a number of years and has "orphan" fibre cables in Wgtn and Chch and substantial quake damage in Chch to recover from.
I also recall reading (AFR?) that Vodafone in Australia is not the powerful beastie it is in NZ but rather on the back foot in Australia getting hammered by all the other players. This may of course induce the British parent to withdraw from Australasia.

[craic]

So how much will they pay me for my TEL shares? I could cope with 350cps How about others?

[POSSUM THE CAT]

MacDuffy To the best of my knowledge as I do not follow this share to any great extent. The amount in the future fund was only a small portion of the Govt. Holdings in Telstra

[bung5]

Seems a good time to leverage TEL up on CFD's

[Major von Tempsky]

Never have I seen financial comments so divided.
The Press yesterday stated that the recent fall in TEL was because it had delisted from the New York Stock Exchange and given that most TEL shares are held overseas and its used for a proxy play on the NZ dollar plus all the exotic derivatives on the NYCSE not just Puts and Calls but God knows what all else as well, that seems a reasonable comment.

Other financial commentators say its because of the global economic situation, the eurozone worries, the Chinese slowdown, some US data & and other NZ shares have fallen equally.

However in the NZH website today we have a woman, I'm tempted to make some sexist comments here, who says "Telecom's share price took a dive this week on news that its main rival Vodafone may buy TelstraClear off its Australian parent Telstra." (Tamsyn Parker, Sunday 10 June). Given that most of the articles I followed up took the view that Telstra-Clear was in a very weak position, nothing much worth having and Telstra had to extricate itself anyway, a kind interpretation is that she has been asleep and hasn't read widely. She's also ignoring that TEL has just confirmed its EBITDA guidance and I note that the gross dividend yield in the SST for TEL is 12.65% which is pretty hard to argue with.

Hellooo! Tamsyn Parker? Wakey wakey....do your required reading....

Stuff NZ website, which covers the Wellington and Chch etc papers has a diametrically opposite view to Tamsyn Parker (quotes a Brisbane observer different from the one quoted further above) and I guess I ought to withdraw my sexist reference as Nicole McCormick is obviously a woman ;-)

OPINION: The most convincing explanation for Telstra's willingness to sell TelstraClear to Vodafone is that it harbours hopes of acquiring all or part of Telecom, either soon or down the track, and it is willing offload to TelstraClear for a song in order to get such a deal past the Commerce Commission.

Certainly, analysts appear unanimous that Telstra would have no hope of getting approval to buy Telecom from the Commerce Commission while it owned TelstraClear, making a sale a necessary condition for any takeover.

Ovum's Brisbane-based senior telecommunications analyst Nicole McCormick argued last month that this might be an opportune time for Telstra to buy either Telecom or Vodafone, and a coming together of the main incumbents was always the more likely scenario.

[Snoopy]

She's also ignoring that TEL has just confirmed its EBITDA guidance and I note that the gross dividend yield in the SST for TEL is 12.65% which is pretty hard to argue with.


Isn't that 12.65% dividend yield historic Major? If so that includes earnings from Chorus when Chorus was still part of Telecom. If everything else remains constant it is unlikely that the Telecom gross dividend yield going forwards will be 12.65%.

SNOOPY

[Major von Tempsky]

Isn't that 12.65% dividend yield historic Major? If so that includes earnings from Chorus when Chorus was still part of Telecom. If everything else remains constant it is unlikely that the Telecom gross dividend yield going forwards will be 12.65%.

SNOOPY

Yes, it must be historic but the major point is that even if you adjust it for that, TEL easily beats any other NZX stock on a sustainable gross dividend yield basis and TEL has just confirmed its EBITDA guidance. Also we have the Buyback going great guns, 3,000,000 shares on Friday and over a million yesterday which has increased and is further increasing the value of TEL shares.
That's just one of several reasons why Tamsyn Parker is away with the fairies.

Threatening TEL with Telstra-Clear NZ when Telstra is desperate to ditch it, is like threatening an alsatian with a toothless Jack Russell/Sydney Silky cross.

Latest Buyback total figs; up to and incl 11 June 2012 TEL has bought back 36,994,627 shares for $92.098 mill at an average consideration of $2.489.

[macduffy]

Yes, it must be historic but the major point is that even if you adjust it for that, TEL easily beats any other NZX stock on a sustainable gross dividend yield basis and TEL has just confirmed its EBITDA guidance

So assuming that TEL meets the top of its range for 2nd half earnings ($190M) what's your estimate for 2nd half dividend - again assuming current issued capital of approx 1.9 billion shares?

[Major von Tempsky]

Ok, I'll put my head above the parapet. 8cps. Basing my guess on the data in this http://www.stuff.co.nz/business/industries/financial-results/6473557/Telecoms-300m-share-buy-back
and the fact they have just re-affirmed guidance.
Chorus took over most of the debt which helps and the Buyback decreases the number of shares on issue to divide the net profit amongst. Reading the data in the ref then TEL are expecting an adjusted net second half year profit of about $190 mill. They declared a first half dividend of 9cps on the basis of a net profit of $240 mill.
Other factors ..... they are continuing to squeeze out costs and they are more generous with dividends in the end of year declaration.

[macduffy]

Looks reasonable, Major. I guess it gets down to how much of the forecast 2nd half CAPEX of $190-220m gets paid for out of current cashflow.

[buns]

Ok, I'll put my head above the parapet. 8cps. Basing my guess on the data in this http://www.stuff.co.nz/business/industries/financial-results/6473557/Telecoms-300m-share-buy-back
and the fact they have just re-affirmed guidance.
Chorus took over most of the debt which helps and the Buyback decreases the number of shares on issue to divide the net profit amongst. Reading the data in the ref then TEL are expecting an adjusted net second half year profit of about $190 mill. They declared a first half dividend of 9cps on the basis of a net profit of $240 mill.
Other factors ..... they are continuing to squeeze out costs and they are more generous with dividends in the end of year declaration.

The buyback decreases the amount of shares which dividends are attached to? It also decreases the cash which could be paid out!

And going by your earlier post, if TEL has purchased $37m shares @ $2.49 they have lost about $4m at today’s price. This doesn’t include all of the opex/money spent to investment bankers and brokers to control the buyback, and increased interest costs from future debt to recoup the cash balance.

Div yields would be much higher without the buyback, the SP would not have been artificially pushed up and they would have more cash. It's a double edged sword for those dividend yield huggers.

[Major von Tempsky]

Nope. Unlike your neighbourhood church and non profit society and many small businesses, larger companies do not operate on a cash basis, any accountant knows that. They look at their earnings, they look at their percentage payout policy and they declare a dividend. If short of cash, unlikely in TELs case, they can push the overdraft a bit, sell some bonds, borrow from lots of very willing institutions, float some bonds, sell some minor marginal assets.
Nope again. At present we are in the trough of a Greek/Spain induced pessimism. You need to take a longer view than just one or two months.
Since latish November last year I have bought 7,000 TEL below today's price and 5,000 TEL above today's price and I'm quite happy with that because I bought for long term income on a horizon of longer than 1 year. (any shorter than that and the IRD would be squeezing me like a lemon so I advise you to extend your horizon to that and buy for income - at least for IRD purposes! Hope some IRD staffer is reading your post ;-)).
So I'm still quite happy if TEL goes down rather further, with the rest of the market, and I will still appreciate the higher div/per share due to the buyback :-)

[buns]

Nope. Unlike your neighbourhood church and non profit society and many small businesses, larger companies do not operate on a cash basis, any accountant knows that. They look at their earnings, they look at their percentage payout policy and they declare a dividend. If short of cash, unlikely in TELs case, they can push the overdraft a bit, sell some bonds, borrow from lots of very willing institutions, float some bonds, sell some minor marginal assets.
Nope again. At present we are in the trough of a Greek/Spain induced pessimism. You need to take a longer view than just one or two months.
Since latish November last year I have bought 7,000 TEL below today's price and 5,000 TEL above today's price and I'm quite happy with that because I bought for long term income on a horizon of longer than 1 year. (any shorter than that and the IRD would be squeezing me like a lemon so I advise you to extend your horizon to that and buy for income - at least for IRD purposes! Hope some IRD staffer is reading your post ;-)).
So I'm still quite happy if TEL goes down rather further, with the rest of the market, and I will still appreciate the higher div/per share due to the buyback :-)

I don't really know what you are talking about in those last 3 paragraphs, I don’t care how many shares you own, or when you bought them. But on the first paragraph.

Yes people communicate accounting profits over cash, they have to. But the money which leaves Telecoms bank account and then enters yours is not EBITDA or NPAT, that is cash. While pay-out %'s may be communicated on accounting profits, they are determined by their capital structure.

Imagine a property which pays out all its profits in dividends, a 100% pay-out. Then one year the property gets revalued upwards and they record a revaluation gain, how are they going to pay that out? They aren’t going to, they will look at their cash balances instead.

Borrowing to pay dividends does happen, when you see it you should run as it’s a clear indication that company doesn’t care about creating value. Over time that is no different than TEL swapping $1 for 90c. They have to pay interest on that money they borrow.

You realise Telecom did this for a long time and eventually got quite leveraged. Now since de-merger they aren't so (as mentioned chorus got most the debt), yet seem to want to race back into that dangerous state. Over that time they also had the same high dividend yields you seem to enjoy now. However if you held over this time, you would have lost a lot of money.

Telecoms applauded dividend policy has only hurt long term shareholders.

[Major von Tempsky]

Rave on Buns, I'll take the dividends. But you really should understand the difference between cash accounting and accrual accounting.
TEL is a big company with a big cash flow and professional full time accountants who are continually doing cash flow analysis. I didn't say they would have to borrow to pay their dividend, that's your assertion. I haven't seen anyone else say that anywhere. I merely pointed out possible ways of getting cash if they surprisingly happened to be short of cash.
Hmm, I can see why you are nearly at the very bottom of the sharepicking competition ;-)

[Silverlight]

Rave on Buns, I'll take the dividends. But you really should understand the difference between cash accounting and accrual accounting.
TEL is a big company with a big cash flow and professional full time accountants who are continually doing cash flow analysis. I didn't say they would have to borrow to pay their dividend, that's your assertion. I haven't seen anyone else say that anywhere. I merely pointed out possible ways of getting cash if they surprisingly happened to be short of cash.
Hmm, I can see why you are nearly at the very bottom of the sharepicking competition ;-)

Buns' point Major is that Telecoms earnings for this full year are only forecast to be 16.9 cps, yet they will pay 17.2cps in dividends, plus spending cash to buyback shares.

They gave all their debt to Chorus agreed, but borrowing more to fund dividends is unsustainable, the current capital structure may be underleveraged, but while they adjust this by increasng debt, the dividends yield is often overstated, however the company is becoming higher risk.

[buns]

Rave on Buns, I'll take the dividends. But you really should understand the difference between cash accounting and accrual accounting.
TEL is a big company with a big cash flow and professional full time accountants who are continually doing cash flow analysis. I didn't say they would have to borrow to pay their dividend, that's your assertion. I haven't seen anyone else say that anywhere. I merely pointed out possible ways of getting cash if they surprisingly happened to be short of cash.
Hmm, I can see why you are nearly at the very bottom of the sharepicking competition ;-)

I'm not sure how you gathered I don't understand accounting. NZICA seem to think I do. I'm not raving either, just pointing out some facts.

Telecom actually did not make much cash for quite a long time, this is pretty obvious if you have looked over there cash flows. If you look over these for a period of time and understand how a corporate works you will see many of the dividends were funded by banks.

[buns]

Good points silverlight.

I wouldn't say they are under leveraged. Telco's cash requirements can change overnight, as new technologies are changed/developed. You will see Telecom's capex pretty much went from $700m to $1.4b in a few years behind FTN (yes now in Chorus), WCDMA and other retail orientated projects.

This far exceeded their every day FCF so the capex bubble had to be funded by outsiders, be it debt or equity.

Telecom right now is going through a dull period of capex growth as they just had some heavy years, however this will change with 4G and other mobile network upgrades as well as capex to provide fibre services and products. Then another cycle will come again.

Telco's are very similar to airlines (capex intensive), all the benefits go to consumers. Larger Telcos are slightly better bets because of scale, if you look into Telstra you will notice they aren't as affected from these capex bubbles/Tech changes and are actually swimming in cash.

[Major von Tempsky]

I'll stick with the TEL forecasts I quoted, very recently reaffirmed by TEL itself, thanks. I would suggest that the debt interest relief from transferring so much debt to CNU needs to be taken into account and the huge reduction in capex now undertaken by CNU.
It's an old political trick - if your enemy (irrational Telecom haters viewpoint) borrows money, even at a low gearing, then you ascribe their expenditure on something as being completely from debt. You may as well say they are paying wages from debt, or taxes from debt. Rubbish.

[Snow Leopard]

This thread is getting to be as good a read as the NZO thread.

Might actually go read their accounts and see what you are all getting so upset about.

best wishes
Paper Tiger

[Major von Tempsky]

Ah! Le tigre a dit! Bon, merci!

Well my latest arithmetical calculations of the Buyback up to and including yesterday 14 June show that TEL has bought 46,705,548 shares (and cancelled them!) for $115.128 million at an average cost of 2.465 ... which just happens to be the price TEL is going for at the time of writing...which just happens to defuse another of Buns blisters. That leaves another $185 million in firepower for the Buyback.

Also some interesting stuff (again!) in today's Press which canvases a whole range of opinions on the Vodafone possible buy of Telstra-Clear, which interestingly Telstra has wasted a $1 billion dollars on so far according to the figures quoted. Page A11 The Press 15 June 2012.
Bronwyn Howell of the Institute for Competition and Regulation is quoted as saying that according to the rules the attempted takeover will have to be referred to CommComm for investigation....which should hold it up for some months.

A range of different financial commentators are quoted with opinions varying from one optimist who thinks its a done deal about to be announced next month for $450 mill to $500 mill. A number of more sober analysts who haven't been smoking pot lately think that's rubbish and Telstra would be lucky to get $285 million!
To be continued :-)

[craic]

my main query at this stage is when is the next dividend due and what is the likely date of the announcement? I am sure that they have gone to half-yearly dividends and that the next payout will be in October? I would love to have a crack at selling on a high and waiting for it to drop like a stone, as it has done several times lately, to buy back in. I tried it once before but the profit was lost, largely through a missed dividend when they were running quarterly dividends. The possibilities of possible buy-outs complicates matters.

[Major von Tempsky]

Craic, yes half yearly dividends and April plus six months equals October for the next dividend.
Maybe a Google search might elicit some informed speculation somewhere.

On the bright side New Democracy plus Pasok seem to have won the Greek election so that should flow through to the NZ share market although players here are afraid of their own shadows and will probably await a lead from Australia at lunchtime.

[Hoop]

Craic, yes half yearly dividends and April plus six months equals October for the next dividend.
Maybe a Google search might elicit some informed speculation somewhere.

On the bright side New Democracy plus Pasok seem to have won the Greek election so that should flow through to the NZ share market although players here are afraid of their own shadows and will probably await a lead from Australia at lunchtime.

Hmmm.....I think the market rose on friday on rumours of secret polling having Antonis Samaras and his New Democracy party being way out in front. I expect a relief rally today (no panic run on the banks) before the market realisation that nothing has changed yet and each day Greece is pulled further into a financial black hole...This election result commits more Euro money to Greece, this has to be seen as a longer term negative??? The media has forgotten about the French Election yesterday and the big parliamentary lurch to the left makes Francois Hollande a much more powerful person so expect anti-Austerity plans to rival Merkels Austerity plans.Personally I think Germany V France is a bigger issue of concern than Greece because they have the control of the bailout money...and remember Spain??? Portugal?? Ireland Italy they haven't gone away.

Yeah A good Day for Telecom until Global realisation hits home..so I wouldn't pin the bull markets of Telcom and NZX50 hopes onto the bear markets of AORDs Nikkei Hang Seng.

[Major von Tempsky]

Hmmm.....I think the market rose on friday on rumours of secret polling having Antonis Samaras and his New Democracy party being way out in front. I expect a relief rally today (no panic run on the banks) before the market realisation that nothing has changed yet and each day Greece is pulled further into a financial black hole...This election result commits more Euro money to Greece, this has to be seen as a longer term negative??? The media has forgotten about the French Election yesterday and the big parliamentary lurch to the left makes Francois Hollande a much more powerful person so expect anti-Austerity plans to rival Merkels Austerity plans.Personally I think Germany V France is a bigger issue of concern than Greece because they have the control of the bailout money...and remember Spain??? Portugal?? Ireland Italy they haven't gone away.

Yeah A good Day for Telecom until Global realisation hits home..so I wouldn't pin the bull markets of Telcom and NZX50 hopes onto the bear markets of AORDs Nikkei Hang Seng.

I think what happened on Monday was that all the extra Trade Me shares dumped on the market soaked up all the free cash around and caused some selling so investors had some money to put into Trade Me.
Tuesday normality had returned :-)

[Hoop]

I think what happened on Monday was that all the extra Trade Me shares dumped on the market soaked up all the free cash around and caused some selling so investors had some money to put into Trade Me.
Tuesday normality had returned :-)

Yes I agree MVT.... It does seems Mondays lack of bullish market response to Europe may have been due to the "Trade Me noise".

ATM, the Global markets are still under the effects from swallowing that Greek Happy Pill ..A good rise yesterday, but Telecom has a bit of work to do today as the shareprice is up against technical resistance around that 250ish area

[Major von Tempsky]

Ok, lets start a few interesting rumours to account for the late morning "aggressive selling" in Telecom.

Hmmm, (a) some player(s) overseas or in NZ has a cash crisis and is desperate to sell to meet calls against their position(s) (b) some player(s) probably overseas thinks/wants the NZ dollar to crash so they're piling on the pressure (c) Telstra is cleverly indirectly shorting TEL so it can't be traced while it hocks off Telstra-Clear for a song and can then make a cheaper offer for TEL.

Nice article by Chalkie in The Press today. From my reading of it Telstra-Clear has avoided paying any tax for 10 years by using Optional Convertible Notes but it's all going to land with a thud with a horrendous tax bill next year. What Chalkie calls "Telstra's plain daughter" is beginning to look not just plain but positively revolting! Poor old Vodafone-NZ....where will they go for their honeymoon....

[Major von Tempsky]

Apparently the rise in TEL today was due to Black Rock Investments raising their stake in TEL from 5% to 6%. :-)

[craic]

When TEL went up to 260 or 61 yesterday, I stuck 30,000 on the market at 265 - and I really didn't believe that they would sell at my price. Came home from the Club only to find that they are sold. Now how long do I have to wait for them to drop low enough to buy in or did some insider trader find out something that might cause the number to keep climbing? And what is the great secret?

[Major von Tempsky]

All will be revealed on Aug 24 :-)

Interesting clip on Bloomberg with some Yank would be guru pronouncing that dividend stocks were overdone (I immediately thought of Snoopy) and one should invest for a mixture of dividends and growth.
He illustrated with reference to the Telecoms industry which in the US are highly priced as safe utilities. He mentioned a PE of 22.6 for US Telecom and I thought hell, take that analysis into the NZX and Telecom would be going for $9.00.....

[sharer]

Way back yonks ago (i couldn't find my post, maybe in a related thread somewhere) i had a rave about the proposed new overseas cable & grumped about the negative effects for TEL.
Especially as there seemed to be no valid unmet demand & so no true business case.
Radio news tonight reports the three main wealthy promoters for the new cable have now abandoned the scheme. Apparently they could raise only about half the money needed.
This seems to validate the earlier critiques.
However TEL has been warned. They must lift their game, while they still have a chance.

[pierre]

Plenty of action with TEL over the past few weeks - SP up from 247 a month ago and up 7.5cents today to 282 right now.

The market must be expecting some good news from Simon next week! Maybe a juicy increase in the divvie?

[Major von Tempsky]

The NZX is, and always has been as leaky as a sieve for insider trading....

SP currently up 8.5cps.....maybe there's a whiff of a takeover by Telstra or some other party....but you'd think the Vodafone takeover of Telstra-Clear would have to go thru before that happens.

Does Whale-Oil know...bet a whole lot of friends and rellies of insiders know....

How all the psycho-Telecom haters must be squirming....

Or has there been some heavy foreign exchange movement? Kiwi dollar crashed?



(alternatively this was all perfectly predicted by the chartists, in Phaedrus and Hoop's last charts, or if it what wasn't they will have perfect 20-20 rear vision how this is all a continuum and easy to explain in charting terms ;-) )

[BIRMANBOY]

Rumour has it that the Commerce Commission is advocating splitting Telecom up again...similar to what happened in the USA when they split up Bell Tel into the mini bells. The minis will be Do-Tell, May-Tell, Will-Tell and To-Telleawsum (restricted to under 25 holders)
The NZX is, and always has been as leaky as a sieve for insider trading....

SP currently up 8.5cps.....maybe there's a whiff of a takeover by Telstra or some other party....but you'd think the Vodafone takeover of Telstra-Clear would have to go thru before that happens.

Does Whale-Oil know...bet a whole lot of friends and rellies of insiders know....

How all the psycho-Telecom haters must be squirming....

Or has there been some heavy foreign exchange movement? Kiwi dollar crashed?



(alternatively this was all perfectly predicted by the chartists, in Phaedrus and Hoop's last charts, or if it what wasn't they will have perfect 20-20 rear vision how this is all a continuum and easy to explain in charting terms ;-) )

[Major von Tempsky]

Aha! To-Telleawsum....totally awesome...

Hmm, closed 9cps up while the Australian market was down today.

But the below would explain at least some of the TEL movement today ....

The kiwi dollar weakened against the US overnight.

The New Zealand dollar shed almost half a US cent after better-than-expected data on both sides of the Atlantic pushed equities higher, easing speculation that global growth is dwindling.

The New Zealand dollar traded at 80.48 US cents at 8am down from 80.96 cents at 5pm. The trade weighted index decreased to 72.50 from 72.85.

[BIRMANBOY]

Telecom has to be the ultimate one share to rule them all..its a "traders" dream come true. I've lost count of the times I could have traded in and out and made handsome profits. You can rely on it to go up and somewhere if you are patient...it will drop down again. Have no idea why its so volatile but if I was so inclined..I'm sure it would be possible to make a very good income off this. There must be someone who does this in the real world. Maybe when I retire I'll put this to the test..but definitely TEL would be the one to do it with.

[BIRMANBOY]

I can see the liquidity and focus certainly but not convinced as to funds using it as a currency play. Just cannot see that funds compounding difficulties by mixing forex and equities. It would be simpler for funds to focus on one or the other. Also any gains on forex could well be offset by drops in SP so could be an exercise in futility. However knowing(or not knowing) why is immaterial in my opinion. It is what it does and is certainly one of my all time great buys. As I said it just irks me occasionally when I look at what I could have made out of it if I was trading as opposed to buying and holding.
BirmanBoy, I suspect that not only do you have the benefit of liquidity and focus on the stock, you have overseas funds using TEL as a currency play.

[blockhead]

Birmanboy

So, as a holder at the moment (I presume) will you sell now and get back in at a later fall ??

[craic]

At two or three weeks out from the half-yearly report, it's more than likely that some leaks develop among the number crunchers and the price goes up a bit. But even more likely is the probability that Euro cash is seeking a stable bolt hole and, in spite of the knockers, this country is seen as economically stable.

[BIRMANBOY]

I like to take my pleasures slowly...every day I can look at the current price and envisage us doing a wonderfull trip somewhere IFFFF I was to cash in. So its sort of prolonging the enjoyment by not selling. Besides that every day I can congratulate myself on making such good decisions. This type of ego boosting , feel good situation is not to be sneezed at. If I sell then its a quick sharp run to the bank (after the IRD tags along) and then I have to worry about what else to replace it with ...or watch it keep going up (GRRRRR), or wait until it drops down again to a decent buy level. So the short answer is no I wont be selling....thats not to say I wont be kicking myself (again) when it does do a dip. If I was trading I would sell now and buy back in at 2.45 or so. Hypothetically I do believe it would be possible to do 10 trades a year and make 5000 per trade. $123,000 @2.45 equals 50,000 shares investment and turn over at a 10 cent or more increase. This is going to be my retirement project.
Birmanboy

So, as a holder at the moment (I presume) will you sell now and get back in at a later fall ??

[Major von Tempsky]

Look no further as to why TEL has fallen 7cps so far today. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10827544

Isn't it ridiculous that Tel's value is not determined by fundamentals but as a proxy for NZ Incorporated.

What happens next Friday - do the currency speculators take a brief break in case some fundamental change in TEL emerges which would overwhelm their foreign currency positions?

[BIRMANBOY]

Sheer speculation that somehow the SP is being manipulated by currency ogres. Wheres your proof or is it just the result of an overactive, caffeine fueled imagination? Why stop at Tel..why not every dual listed company? How about the possibility that some traders took some profits since it had reached a high?
Look no further as to why TEL has fallen 7cps so far today. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10827544

Isn't it ridiculous that Tel's value is not determined by fundamentals but as a proxy for NZ Incorporated.

What happens next Friday - do the currency speculators take a brief break in case some fundamental change in TEL emerges which would overwhelm their foreign currency positions?

[Major von Tempsky]

Because Myanmarson ol'boy, I happen to hold 6 digits of TEL and have done so for some years and naturally because of that I watch it all the time and I can tell you it happens nearly all the time. Occasionally it doesn't happen (Tuesday I think was an exception I'll have to check) and its then a surprise. No it doesn't happen for any other share except CNU, although it now appears to have ceased there. It continued to happen for a while after the separation (see the CNU thread for a reference graph from the media showing it happening).

If you think about it for a while you'll see why....the NZ $ is the 10th most traded currency internationally and probably the cleanest float. No other NZ share has the volume to sustain this role, you can buy and sell decent volumes without moving the price. The NZ dollar is still reasonably predictable overnight to a currency trader, good EU or dairy price news and the NZ dollar goes up and TEL down. Bad EU news, Grexit and Pains etc and it goes down and TEL goes up. Now that its 6 months between TEL reports thats even better for currency traders, no new fundamentals to disturb the game its now Govt and ComCom hands off on TEL which makes it even better for them.

[BIRMANBOY]

Yes I understand you have convinced yourself..thats obvious. I remain unconvinced however and would suggest that you have made your theory fit the facts without regard to other possible contributing factors that didnt factor in to your thinking. I find it extremely hard to believe that funds/orgs/whatever will resort to having to trade shares as a conduit to dealing in currency. Currency traders morphing into share traders for what? KISS currency traders trade currency not shares. However if you believe your theory who am I to crush your beliefs:cool:. Maybe we need someone who actually has real life experience in this to verify the viability and correctness of your theory?
Because Myanmarson ol'boy, I happen to hold 6 digits of TEL and have done so for some years and naturally because of that I watch it all the time and I can tell you it happens nearly all the time. Occasionally it doesn't happen (Tuesday I think was an exception I'll have to check) and its then a surprise. No it doesn't happen for any other share except CNU, although it now appears to have ceased there. It continued to happen for a while after the separation (see the CNU thread for a reference graph from the media showing it happening).

If you think about it for a while you'll see why....the NZ $ is the 10th most traded currency internationally and probably the cleanest float. No other NZ share has the volume to sustain this role, you can buy and sell decent volumes without moving the price. The NZ dollar is still reasonably predictable overnight to a currency trader, good EU or dairy price news and the NZ dollar goes up and TEL down. Bad EU news, Grexit and Pains etc and it goes down and TEL goes up. Now that its 6 months between TEL reports thats even better for currency traders, no new fundamentals to disturb the game its now Govt and ComCom hands off on TEL which makes it even better for them.

[Major von Tempsky]

Read what I said with your eyes open.

Now give me the reference where I said "The only factor causing rises and falls in the TEL price is foreign currency speculation". Its not there is it, nor did I intend it. It's you who jumped to conclusions that I had said that or intended it. Nor, I expect, did you bother looking up the CNU reference I mentioned in which media scribes gave a graph showing shareprice fluctuations correlated with foreign currency movements.
Recently for example the CNU ComCom announcement caused a rise in CNU and a corresponding fall in TEL both unrelated to foreign currency speculation. Why? because CNU sells services to TEL.

Frankly I don't care whether you don't believe that there is a fair bit of foreign currency speculation linked to the TEL share price going on. There's heaps of other people including in the financial media, who do.
Now perhaps we can move on to some intelligent analysis of TEL and CNU with less than a week to go to their two announcements.

[BIRMANBOY]

Yes well opening your eyes would be more to the point my friend. I didnt say that you said "The only factor causing rises and falls in the TEL price is foreign currency speculation". I simply said that I doubted whether price moves were anything at all to do with or about currency trading. The fact that you were even considering it as a possible explanation was what I was taking issue with. "Intelligent analysis" is welcome however intelligent analysis that wants to factor in currency traders moves beyond intelligence into the realm of wanting to create order and understanding where none is possible. In order to prove your theory as a possible cause of price movements you would have to have contacted every buyer and seller and quizzed them on what was the actual reason they were buying or selling. Obviously cant be done, so any attempt to explore the underlying reasons why the price moved and then tie it into currency movements.... and then make the assumption that it could have been made or assisted by currency traders is by my reasoning laughable. Believe what you want...I only believe what i can prove...anything else is just useless chatter.
Read what I said with your eyes open.

Now give me the reference where I said "The only factor causing rises and falls in the TEL price is foreign currency speculation". Its not there is it, nor did I intend it. It's you who jumped to conclusions that I had said that or intended it. Nor, I expect, did you bother looking up the CNU reference I mentioned in which media scribes gave a graph showing shareprice fluctuations correlated with foreign currency movements.
Recently for example the CNU ComCom announcement caused a rise in CNU and a corresponding fall in TEL both unrelated to foreign currency speculation. Why? because CNU sells services to TEL.

Frankly I don't care whether you don't believe that there is a fair bit of foreign currency speculation linked to the TEL share price going on. There's heaps of other people including in the financial media, who do.
Now perhaps we can move on to some intelligent analysis of TEL and CNU with less than a week to go to their two announcements.

[blockhead]

Birmanboy

$2.80...........................in or out ?????

[BIRMANBOY]

Get thee behind me Satan. Thats not fair...tempting me with your sultry dial tones and sleek mobile accessorys. I will be faithfull to my spouse and hold on to my one and only true love. Lesser individuals would sell up and move on to enjoy the rewards but I am a stubborn bstd and will not be moved.
Birmanboy

$2.80...........................in or out ?????

[blockhead]

Lets hope Friday rewards you for holding, as someone said earlier, a nice juicy divy would go down nicely.

Might hold myself.

[BIRMANBOY]

Yes..well Confucius say.."man better to hold himself than let stranger do it". My problem is of course that it would take 10 plus years of dividends to outpace my capital gain if I cashed in so I'm somewhat ambivalent about the whole situation. As I said I know its going to drop at some point at which point I (as well as my partner) will be putting the boot in and questioning my sanity. Sigh....cant win here.
Lets hope Friday rewards you for holding, as someone said earlier, a nice juicy divy would go down nicely.

Might hold myself.

[Major von Tempsky]

Could be a good day on the market :-)

"Telecom rose 2.4 per cent to $2.80 and has gained about 30 per cent this year. It will post its full-year results on Friday and Forsyth Barr analyst Guy Hallwright has forecast a 14 per cent increase in sales to $4.7 billion and a 37 per cent rise in reported profit to $330 million."

(No doubt that will prompt an inrush of the psycho-Telecom haters and rabied left-wingers. Or should that be left-whingers. Its an interesting speculation that the rabied left-whingers actually have very few shares on which to base their massive pronouncements....).

[blockhead]

[QUOTE
(No doubt that will prompt an inrush of the psycho-Telecom haters and rabied left-wingers. Or should that be left-whingers. Its an interesting speculation that the rabied left-whingers actually have very few shares on which to base their massive pronouncements....).[/QUOTE]

Which perhaps gives credence to David Shearers argument to say "Mums & Dads will not end up owning Mighty River, Air NZ etc etc"

[Silverlight]

Could be a good day on the market :-)

"Telecom rose 2.4 per cent to $2.80 and has gained about 30 per cent this year. It will post its full-year results on Friday and Forsyth Barr analyst Guy Hallwright has forecast a 14 per cent increase in sales to $4.7 billion and a 37 per cent rise in reported profit to $330 million."

(No doubt that will prompt an inrush of the psycho-Telecom haters and rabied left-wingers. Or should that be left-whingers. Its an interesting speculation that the rabied left-whingers actually have very few shares on which to base their massive pronouncements....).

Forsyth Barr also rate Telecom a hold, with a price target for $2.08... did you miss this part?

Disc: non-holder from $2.70.

[blockhead]

$3.08 perhaps ???

[Silverlight]

Forsyth Barr Investment View: Telecom

While cost and capex reduction plans and the current onmarket buyback have boosted TEL’s share price, our model suggests the market is now factoring in a strong and sustained rise in returns on capital. We believe this is likely to prove over-optimistic given increasing competition in the retail business. The share price is above our $2.08 valuation and we think there is more downside than upside risk.

Our recommendation remains HOLD, but will be reviewed following the result with a negative move probable.

[blockhead]

Thats certainly good advice then, "we reccomend you hold something worth $2.80 at the moment because we think it is actually worth $2.08 and will probably move in that direction"

Think I might stick to my own free advice !

[BIRMANBOY]

Yes agree Block head. They are so out of it they dont even recognise the idiocy of their statement. Why would you even contemplate taking advice from them. Monkeys with darts.
Thats certainly good advice then, "we reccomend you hold something worth $2.80 at the moment because we think it is actually worth $2.08 and will probably move in that direction"

Think I might stick to my own free advice !

[Major von Tempsky]

Hmmm, several years ago I used to hold on to brokers recommendation sheets for a year then compare them to what actually happened. Usually less than a third of the shares discussed had even gone in the same direction as the brokers indicated.
There are all sorts of factors which I suggest the above has not fully considered e.g. the huge decrease in TEL capital expenditure now that CNU is doing it all with assistance from the Government. You don't argue with the Government man as Theresa Gattung found to our cost, same with Sol whtisname and Telstra in Oz.
Also, there's more than 1 broker and you wouldn't have a sustained 9 month or so rise in Tel if the above was the majority broker view.

Today, and you can see the foreshadowing in the MSN NZ Money article I posted from ( a small drop in FBUs profit even before interest, depreciation, amortisation is subtracted) FBU has dropped like a stone and in the usual lemming like mob mentality investors have also punished TEL and CNU even though they have absolutely nothing to do with FBU. Maybe we should have a compulsory IQ test before someone is allowed to be an investor, or a broker for that matter.
$2.08? Ha! ha! ha! Ho! ho! ho! That must have been written by some moron in pre-separation days who had been smoking pot.

But maybe schizophrenia is the problem, Guy Hallwright works for Forsyth Barr and it's he who quotes the 37% increase in profit.

[Silverlight]

A 37% increase in profit from a low base (or poor year) is nothing to crow about.

First NZ price target $2.20, Jp Morgan $2.25, Craigs $2.33. RBS is actually the lowest at $2.05. Telecom is trading over a 15 P/E, even Telstra is only on 13 P/E, the last time Telecom traded on this multiple (ex Chrous) was in March 1999... hmmm.

Just curious where you think the significant earnings growth that will drive this multiple is coming from? Increase in mobile data revenue, broadband?

Telecom has more than doubled from $1.30 (ex-chorus), and the current business model does not contain a catalyst to drive earnings growth that the market seems to be pricing in, none that I can see.

Disc: non-holder from $2.70.

[Major von Tempsky]

There are several ways of valuing a share. One is to total the assets (historic cost or current value?), subtract the liabilities and divide by the number of shares on issue. TEL doesn't have much by way of physical assets now that CNU is gone so maybe they took that route.
Another route is to assess the stream of earnings and apply a market ratio to that.

Aniother route (which is my preference) is when the share has a stable earnings/dividend/imputation credit history and an expected stable or growth extrapolation forward, to look at the gross dividend yield percentage.
Consulting today's Press I see that 9.16% is quoted as the gross dividend yield percentage for TEL.
Naturally I am a holder/buyer/accumulator for a return of 9.16% as are lots of other people and institutions.

So I would suggest that your broker "experts" are away with the fairies and using a very conservative route to valuing TEL.
Anyone like to tell me where I can get 9.16% at a bank in NZ? Or even a finance company these days?
I'll continue laughing all the way to the bank and wondering as to the sanity of those quoted above.

[blockhead]

Press may not have got that just right Major, below is off the DB web site



Total Issue: 1,856,780,364
Market Capitalisation: $5,133,997,706 (@276.5)
Earnings/Share: 41.04 cents
Price/Earnings Ratio: 6.74
NTA/Share: 55.73 cents
Dividend/Share: NZD 18.5 cents
Dividend Yield: 6.69%
1-Week Range (Low - High): 266 - 287
4-Week Range: 252 - 287
26-Week Range: 212 - 287
52-Week Range: 193.5 - 287

[Major von Tempsky]

The Press have got it right Blockhead.

I, and The Press, refer to GROSS Dividend yield. That includes the imputation credits. Simple dividend % doesn't.
According to The Press these amount to 7.19cps, hence the Gross dividend yield of 9.16% a year. And that's why TEL's price keeps increasing as dividend conscious investors pile into it.

Any more elementary questions?

[Major von Tempsky]

Whee! 11cps dividend 75% imputed! (doesn't worry me I have oodles of unused imputation credits in my investment company account). But can't find date payable or ex-date yet.
Beats my guess of 8cps but then they're going out on a limb a bit (like FBU) earnings per share 2cps less than dividend per share.

Now where's the Chorus result?

[Major von Tempsky]

Down 10.5cps so far - but who cares? I'm laughing all the way to the bank. They can can take it down to a dollar a share if they want to - I'd buy some more!
Divvy due 5 Oct.

No Chorus result???!!!! What's happening there?

What's happened to the rest of u? Still in flaming bed?
In the words of the famous Aussie tourist ad "Where the bl**dy h**l r u?

Next Monday for Chorus. You can go back to bed now.

Well whatever else NZX investors are they're certainly not income investors! The media says earnings will be slightly weaker next year. I'll take the chance.

[JMKC]

down 15.5c now...are you saying you're happy to take a capital loss of x times the dividend because the theoretical yield looks attractive?

[tim23]

He hasn't sold yet and I suspect his entry price average is pretty good too.

[JMKC]

He hasn't sold yet and I suspect his entry price average is pretty good too.

That is irrelevant...surely you make decisions based on where you think share prices/yields are going as opposed to where they've been.

[Snow Leopard]

That is irrelevant...surely you make decisions based on where you think share prices/yields are going as opposed to where they've been.

We are all individuals and you do not get more individual than the Major.

Read the confusion that is the announcement and think I understand some of it.

Flat to negative growth expected for next year?

Tiger's current valuation $2.25

best wishes
Paper Tiger

[Major von Tempsky]

Its not a theoretical return, its an actual return. Your putative capital loss is theoretical, only if I'm stupid enough to sell. Radio NZ Business News is reporting "flat" earnings next year and Simon Mouttier the new CEO is promising some new exciting news release next year.
Overseas, utilities are highly regarded as income shares with much much higher multiples than on the NZX. Eventually the NZX will fall into line with overseas as sanity begins to prevail here.
All except my last TEL purchase since Dec last year (5,000 at $2.00 in Dec 2012) are in capital profit (theoretical) so Yah, Boo, Sux.
I intend to spend my enormous dividend on a nice overseas trip to Canada and Europe next year while you guys are still getting ulcers over whether you have made a theoretical capital profit or loss. Presumably you doing the same on FBU & &....

[macduffy]

Clearly, you know more about the company and the industry than I do, MvT, but hasn't TEL lost a fair bit of its "utilities" characteristic now that the Chorus functions/activities have been hived off? Isn't it now much more dependent on its ability to compete with other telco providers, with the higher risks and earnings volatility involved?

I don't disagree that TEL now starts to look attractive at these prices but I'll be looking for SP consolidation before adding to my small pile.

[sharer]

At first rapid scan of results some figures did surprise at first, e.g. the apparent reduction in revenue & profits due to absence of Chorus (for only ~ half year?) was less than i expected.
In the other direction the large 42% increase in XT connections seems very encouraging; but could i be misled if a lot of this number just reflects migration of folks off of CDMA.
So i'm waiting for more expert analysts to comment before considering any re-weighting exercise, happy to sit for a while.
Generally, i am cautious from noting the numerous examples given in the report of lower business results in quite a few of TEL's various sectors - dampens my view of the near future.
And of course i join MvT with a cup of tea while we wait to see what Chorus has to report next Monday.

[Major von Tempsky]

Aha! A couple of moderate comments. I was looking for a real genuine 1987 reaction and a day reading Revelations under the bed in my gas mask. I only made 1 mistake in the 1987 October panic, I was much younger and inexperienced then - selling. And I note Bob Jones has replaced his old mantra of Location location location with "Never Sell".

Fly fools fly! All is lost! Sauve qui peut! Panic, fear, despair, desperation, disaster, hysteria, sell everything possible at the lowest possible price! Immediately! (just tell me when your sell price gets really extremely silly again and I'll buy some more ;-)

Yes, a nice cup of tea on Monday contemplating some real data about Chorus sounds attractive.

Well macduffy, have a look at the US telecoms sector - from memory from an article I read about a month ago there's upwards of 20 in the sector and they can't all be Chorus type and their Price/earnings ratios are really rich, really over the top especially compared to TEL of NZ. NZ must be about the best place in the world to invest in in terms of gross dividend yields and yet all sorts of otherwise rational people insist on sending their money overseas and getting hassled to death by IRD for a start.

[craic]

I obviously don't have the level of financial understanding enjoyed by many of the commentators on this column. In 2010 when I was in the UK my Tel shares were struggling to get past 190cps.since then I have enjoyed several good dividends and, just last December Iwas able to cash in my "free" chorus shares and buy a new car. Now I am going to be able to have a decent overseas holiday with my wife on this latest dividend. My 190cps is now 250cps. But thats not all. My son and his wife and children are here on holiday from the UK and, apart from the airfares, his entire visit is financed from the TEL shares that I bought for him. Today, as we all enjoyed a great lunch at a winery, I could say that next time, we will be able to pay the airfares as well. Please tell me where I am going wrong?

[Aaron]

Clearly, you know more about the company and the industry than I do, MvT, but hasn't TEL lost a fair bit of its "utilities" characteristic now that the Chorus functions/activities have been hived off? Isn't it now much more dependent on its ability to compete with other telco providers, with the higher risks and earnings volatility involved?

I don't disagree that TEL now starts to look attractive at these prices but I'll be looking for SP consolidation before adding to my small pile.
I know next to nothing about the company or industry so I was wondering if Telecom owns the main cable out of NZ and the main spine of the new fibre network how do they charge for these, wouldn't that be utility type monopoly income. I could probably read the annual report and find out but its easier asking questions here.

[Excelsior]

I obviously don't have the level of financial understanding enjoyed by many of the commentators on this column. In 2010 when I was in the UK my Tel shares were struggling to get past 190cps.since then I have enjoyed several good dividends and, just last December Iwas able to cash in my "free" chorus shares and buy a new car. Now I am going to be able to have a decent overseas holiday with my wife on this latest dividend. My 190cps is now 250cps. But thats not all. My son and his wife and children are here on holiday from the UK and, apart from the airfares, his entire visit is financed from the TEL shares that I bought for him. Today, as we all enjoyed a great lunch at a winery, I could say that next time, we will be able to pay the airfares as well. Please tell me where I am going wrong?

This company's been shafting NZ'ers for years. Being a monopoly it's customers had no choice. Now they have they're leaving to other providers in droves. Falling Market share. They must've lost tens of thousands of landline customers to telstra clear with its $75 broadband deal. Telecom didn't even try to match it. I sold my shares and changed providers. NZ'rs have long memorys of being held ransom and ripped off. Thank Teresa Gatting and her cronies for that. The only thing that will save this company from being another bit player is a change of name and branding to get rid of the stench from yester year. So that's where you're going wrong Craic old boy, expecting that it has loyal customers when it didn't look after them in the past, and still isn't. It might be a slow process but it's bound to flow through into the bottom line over time.

[BIRMANBOY]

Spoken like a true revolutionary Sir! I'd be humming a couple of verses of the Red Flag if I could remember them. Its a BUSINESS not a division of the Social Welfare dept. If you hadnt noticed the aim of most business's is to make as much money as possible. They share that profit with us as shareholders. The reality is that if any business charges "too much" they will be brought into line by either competitors, the Govt or the Comm Comm. You make the mistake many people make in financial decision ..letting their emotions overide the business realities and practicalities. As a business of good standing Telecom will balance the need to keep customers with the need to make a profit. The fact that a few people change providers as rapidly as changing their underwear is called "churn" and basically common across all similar industries. Wait a year and they will have gone full circle. Bottom line is Telecom is a good business...its a bit unfair to slag it off because its "too" successfull. Smacks of Envy.
This company's been shafting NZ'ers for years. Being a monopoly it's customers had no choice. Now they have they're leaving to other providers in droves. Falling Market share. They must've lost tens of thousands of landline customers to telstra clear with its $75 broadband deal. Telecom didn't even try to match it. I sold my shares and changed providers. NZ'rs have long memorys of being held ransom and ripped off. Thank Teresa Gatting and her cronies for that. The only thing that will save this company from being another bit player is a change of name and branding to get rid of the stench from yester year. So that's where you're going wrong Craic old boy, expecting that it has loyal customers when it didn't look after them in the past, and still isn't. It might be a slow process but it's bound to flow through into the bottom line over time.

[BIRMANBOY]

Nice to see the SP has dropped down..will provide some buying opportunities next week.

[Snow Leopard]

... I'd be humming a couple of verses of the Red Flag if I could remember them....

The people's flag is deepest red,
It shrouded oft our martyred dead,
And ere their limbs grew stiff and cold,
Their hearts' blood dyed its every fold.

(chorus)
Then raise the scarlet standard high.
Within its shade we live and die,
Though cowards flinch and traitors sneer,
We'll keep the red flag flying here.

Look round, the Frenchman loves its blaze,
The sturdy German chants its praise,
In Moscow's vaults its hymns were sung
Chicago swells the surging throng.

(chorus)

It waved above our infant might,
When all ahead seemed dark as night;
It witnessed many a deed and vow,
We must not change its colour now.

(chorus)

It well recalls the triumphs past,
It gives the hope of peace at last;
The banner bright, the symbol plain,
Of human right and human gain.

(chorus)

It suits today the weak and base,
Whose minds are fixed on pelf and place
To cringe before the rich man's frown,
And haul the sacred emblem down.

(chorus)

With head uncovered swear we all
To bear it onward till we fall;
Come dungeons dark or gallows grim,
This song shall be our parting hymn.

[BIRMANBOY]

Thanks...now off to the barricades we go.
The people's flag is deepest red,It shrouded oft our martyred dead,And ere their limbs grew stiff and cold,Their hearts' blood dyed its every fold.Then raise the scarlet standard high. (chorus)Within its shade we live and die,Though cowards flinch and traitors sneer,We'll keep the red flag flying here.Look round, the Frenchman loves its blaze,The sturdy German chants its praise,In Moscow's vaults its hymns were sungChicago swells the surging throng.(chorus)It waved above our infant might,When all ahead seemed dark as night;It witnessed many a deed and vow,We must not change its colour now.(chorus)It well recalls the triumphs past,It gives the hope of peace at last;The banner bright, the symbol plain,Of human right and human gain.(chorus)It suits today the weak and base,Whose minds are fixed on pelf (http://en.wikipedia.org/wiki/Pelf) and placeTo cringe before the rich man's frown,And haul the sacred emblem down.(chorus)With head uncovered swear we allTo bear it onward till we fall;Come dungeons dark or gallows grim,This song shall be our parting hymn.

[POSSUM THE CAT]

And when Telstra Clear is owned by Vodaphone will there be a rush to get back to Telecom. This is my thoughts. Have Vodaphone given up on having their call centres in Egypt yet. That was a great way to stop receiving complaints. They have not got a monopoly now.

[fungus pudding]

And when Telstra Clear is owned by Vodaphone will there be a rush to get back to Telecom. .

I very much doubt it.

[Sideshow Bob]

I obviously don't have the level of financial understanding enjoyed by many of the commentators on this column. In 2010 when I was in the UK my Tel shares were struggling to get past 190cps.since then I have enjoyed several good dividends and, just last December Iwas able to cash in my "free" chorus shares and buy a new car. Now I am going to be able to have a decent overseas holiday with my wife on this latest dividend. My 190cps is now 250cps. But thats not all. My son and his wife and children are here on holiday from the UK and, apart from the airfares, his entire visit is financed from the TEL shares that I bought for him. Today, as we all enjoyed a great lunch at a winery, I could say that next time, we will be able to pay the airfares as well. Please tell me where I am going wrong?

Love your work Craic, and hope you enjoyed the vino!

[Major von Tempsky]

On the other hand Belge, that earnings vs dividends per share was for the half year, when you look at the full year the earnings per share are 2cps more than the dividends.

[winner69]

Forbar says TEL worth $2.06.

Forbar usually optimistic

Forbar's Hallwright is a guru

[BIRMANBOY]

I would suggest strongly that you should sell all your shares immediately then (if you have any). Based on the fact they say its worth 2.06 and its last trade was 2.50 that would appear that they have severely underestimated its desireability in the marketplace. This may call into question the actual reliability of your "gurus" ability. I trust the markets ability to show the way... way more than some plonker in loin cloth and cufflinks.
Forbar says TEL worth $2.06.

Forbar usually optimistic

Forbar's Hallwright is a guru

[POSSUM THE CAT]

How many have you people got for sale at $2.06

[stoploss]

Forbar says TEL worth $2.06.

Forbar usually optimistic

Forbar's Hallwright is a guru

Running someone over in a road rage attack is not the behaviour of a guru.....

[Jim]

How many have you people got for sale at $2.06

I will buy it at $2.07 any sellers Guru ??

[winner69]

Same article in NBR ....... Deutsche Bank a 12-month target of $2.33

[Major von Tempsky]

Guru? Cynical laughter. Arkwright rather than Hallwright.

Presumably he did some accounting at some stage somewhere? Including how to value shares using several different approaches?

Why then does he use the break-up/forced liquidation approach to valuation? Instead of the assumption that it is a going concern with flat earnings which will continue paying out majority imputed credits and distribute the vast majority of its earnings each year.

Guru? If he was a guru he wouldn't be working at Forbar as a journeyman, he'd be over in New York or London. I bet I've probably got more invested in the NZ sharemarket than he has and more qualifications. Guru? Rolls about in helpless laughter.

[troyvdh]

Its funny you say that Major...I have heard......you have quite a fan club.....your views apparently attract much attention.....most of us are probably envious......mmmmm.....troy

[Major von Tempsky]

Incidentally did this alleged guru (sorry, can't stop laughing!) Arkwright/Hallwright state his assumptions for inflation and interest rates - or didn't he have any/didn't bother?

That is absolutely crucial to any valuation/prediction on any NZ share let alone TEL.

Mine are that inflation will continue at 0% to 1% in the low side of that range as world conditions weaken/flatline and 1 year bank deposit rates go down to 3% to 4% and maybe lower. What are his? An echoing silence?

In that situation a company like TEL that can flatline in those conditions that continues high dividends and imputations becomes even more valuable.
Ask yourself the question: would I rather have my money at 3% in the POSB, sorry Kiwibank, or at 10% plus in TEL?

Its no contest.

[BIRMANBOY]

Yes Sparky couldnt agree more...your'e hit the nail directly on its protuding flat circular surface. I personally cant see interest rates recovering very quickly or even slowly so Tel and others provide a very nice hedge against erosion of capital. There are still decent yields in Bonds as well (TPW at 6.75% at moment), and even though its a couple % points behind the TUA and TEL etc, these do give some diversification options. Oh for the good old days...I remember the old man crowing about getting a 3 year term deposit at 21% !!! Yes know that was positively prehistoric.
Tempsky correctly raises an important issue here - it's not just whether we as regular share investors think TEL is going to be $2.50, $2.70 or $2.20, it's whether many others out there look for superior rates of return than keeping money in the bank earning an utter pittance.

Given that bonds are issuing at measly rates of around 6.5% these days, that there are few finance companies people would put their money into, and that property is in the middle of a bubble fueled by cheap interest rates, then blue chip companies on the sharemarket are actually an attractive option for investors.

Telecom may go up, not because of projected growth in earnings, but because of dividend yields, also offering some upside in capital appreciation.

If I was a 65 year old semi retired individual with a $100,000 investment to make, the $3500 in income from the bank pales in comparison to the superior 9.3% one gets from Telecom.

The sharemarket, in my opinion, will be a desirable place to invest over the next few years because the many other options available to investors are simply not going to deliver a decent return, or no longer exist due to the GFC.

[BIRMANBOY]

Woo hoo ride em cowboy...2.38. If that isnt panic selling I dont know what else. All those traders cementing in their gains? Interesting that they are taking the gains and forgetting the dividends so obviously a lot of people sitting on gains that outweigh the dividend. Looking to get some more some time...but when is the big question.

[BIRMANBOY]

Could be..own both anyway so out of one pocket into another I suppose. Seems to be plenty of buying support for Tel at 2.41. That might be the fastest turnaround you''ll see..but time will tell.
Are shareholders getting out of Telecom and into Chorus?

[Jim]

Are shareholders getting out of Telecom and into Chorus?

Someone could be shorting Tel---$130m turnover ?? HUGE

[troyvdh]

...sniff....sniff....gnarl.....gggnnnnnaaaarrrrrrr lllll......woof.....woof.......gnarl.....sniffle.. .......snif....whwhwhwh.....snore.....