Telecom vs Chorus

[Animeart]

Can't find any discussion re the impending de-merge so I though I better start one.

Has anyone done any homework on whether it would be better value to sell now or to wait till after the demerge, then sell shares in both companies? In other words, if my total investment in TEL is worth $1,000.00 now, would the combined value of my Telecom and Chorus shares be worth more after de-merge?

I'm keen to sell ALL now and buy TEL back later after the de-merge because...

1. I would get my hands on dividend sooner. (Chorus shareholders have to wait till much later next year I believe)
2. Since TEL can be a takeover target after the demerge it could potentially be worth more.
3. With the ongoing problem in Europe I'm betting the share market to nose dive in Dec, which has traditionally be the case for TEL anyway. I would then look to buy back my position at a far lower cost.

Any thoughts?

[craic]

I have 32500 Tel and I intend to hold. Watch the price coming up to the date because, whether you like it or not, insiders will be trading, and they will give some indication of what to expect. I have a few grand to spare at present so I intend to buy a few more soon. In my mid seventies, I am happy with the quarterly supplement to my pension.

[Major von Tempsky]

Agree with Craic. The new TEL is supposed to be higher yielding than Chorus. I intend to wait for the next TEL dividend announcement (tomorrow?) to get a better handle on what's happening/going to happen.

Like Craic I'm sitting on about 20k which I intend to splurge on the new TEL at the soonest or best poss opportunity (early December?).

The price of TEL is artificially depressed (i.e. the gross dividend yield is surprisingly high) because about 65% of TEL is held by overseas shareholders who use it as a proxy play on the NZ dollar which is the tenth most speculated in currency internationally.

The war between Government and TEL ended with the announcement of the UFB fibre contracts allocations (Victory to TELECOM/Chorus) and the demerger activity. Presumably more and more people will see the stupidity of holding cash at 4 or 5 percent when you can get 11% on the TEL gross yield percent. Also, for some reason Chorus has been left holding the bag on far more of the old TEL debt than new TEL.

[Animeart]

Appreciate you two's insights. Yes, the high yield is the main reason I intend to stick with TEL in the long run. However, I reckon I paid too much for mine so actually sold all my positions today, just in case the worsening situation in Europe has an adverse affect. I'm not too keen on Chorus, partly due to the higher debt, and also I believe higher value shares tend to be more volatile. I want to get my position back ASAP after the demerge in late Nov, to start with a fresh sheet, and hopefully I can do it before the dividend cut off date.

I was sitting on a rather large pot, so didn't want to risk taking too long to recover or having to pump more cash if the price nose dive. The NZ Herald today mentioned the likelihood of a takeover again but I reckon we should not get too excited yet, as any potential bid will probably still be another 2-3 years away. Auckland Airport on the other hand might be a different story....

[craic]

Don't take your advice from the Herald. It's the only financial column who can be stupid enough to average percentages. It was a year or two ago so I don't remember the article but it was enough to confirm my suspicions that they use the same financial experts as the Labour Party.

[craic]

Trending upwards again so someone must think its a safe place in stormy weather. As an aside, my friends son is one of the occupiers ,or whatever they call themselves protesting in the central London. My son is a few yards away, working in the Bank of America. One is delivering dire predictions of how they are going to destroy Capitalism - the other thinks its all a bit of a joke. I know that they both hold shares in various companies.

[Billy Boy]

Sorry to ask , but have been away, so not up with things.
When the split happens, will holders in the old telecom get
shares in both New Telecom and Chorus, or just new telecom.
cheers BB

[macduffy]

Page 12 of the 525 page Demerger "booklet".

"... Shareholders will keep their existing Telecom shares and receive one new Chorus share for every five Telecom shares they hold ........"

[Billy Boy]

Page 12 of the 525 page Demerger "booklet".

"... Shareholders will keep their existing Telecom shares and receive one new Chorus share for every five Telecom shares they hold ........"
Cheers 4 that
BB

[Animeart]

The million dollar question is obviously how much TEL is going to drop after the de-merge. No free lunch I presume, so your combined TEL and Chorus holdings will be worth roughly the same as the stand alone TEL.

I'm not sure if this is what's going to happen, but let's say the closing price of TEL on the night before de-merge were $2.60 and you hold 1,000 shares, then the split could be as follows..

TEL = 1,000 shares @ $1.80 = $1,800
Chorus = 200 shares @ $4.00 = $800

In short, if one goes up and the other must come down. Just my guess.

[craic]

I suspect that there will be little change in the TEL price. The chorus will be a bonus - either way the the combined value will be greater than the current TEL price.

[macduffy]

Bonuses often deliver a "feel good" effect to shareprices but are, of course, just another way of slicing up the pie - into smaller portions!

TEL make this point, in a nice way, in the booklet - page 31 - " The price of Telecom Shares is expected to decrease on the entitlement date for the Demerger........ ". What actually happens will depend very much on the mood of the markets at the time and the "excitement" generated by the listing of the separate companies.

[Major von Tempsky]

From the ODT 27/09/2011
"Forsyth Barr research director Guy Hallwright was contacted after the meeting and said an independent report had valued New Chorus in a range of $2.92 to $4.61, with the brokerage picking a price closer to $5 per share.

Telecom's post-demerger predicted range from the independent report was $1.73 to $2.33, but Mr Hallwright predicted about $1.65."

From the NZH 13 Sept 2011
"Splitting Telecom into its retail and network businesses may cost as much as $150 million though the estimated benefits of the plan are more than three times as great, company documents show.

A shareholder booklet on the demerger of Telecom and its Chorus network business put restructuring costs at between $85 million and $120 million, including fees for lawyers, accountants, corporate advisers and communications.

A further $20 million to $30 million may be spent on separating the IT systems.

"It's not hugely material, but it is a cost," chief financial officer Nick Olsen told analysts on a conference call today.

Still, those costs are far outweighed by the benefits of Telecom splitting its business, letting the new retail arm shed its regulatory burdens and providing Chorus with a $929 million injection to build the majority of a nationwide broadband network.

Independent adviser Grant Samuel said the value of cooperating with the government and carving up the business was some $500 million, or 28 cents per share, in its report on the demerger.

[Animeart]

I seriously doubt that the combined Telecom and Chorus shares would be worth significantly more than TEL on its own prior to de-merge. If they were indeed higher then I'd be tempted to sell all Chorus shares and buy TEL instead for the reasons I set out earlier. Also, remember that dividend is not far away after the demerge so expect TEL price to fall even further towards the end of Dec. The last dividend pay out was probably the worst fall I can remember. Shortly after it went ex-dividend TEL fell by another 10 cents or so...gulp. Better off doing away with dividends and just pick up some bargains afterward I reckon. *sigh*

[Major von Tempsky]

Well I dunno - according to The Press this morning people and institutions buying into Trade Me at $2.70 can expect a yield of 5.1%.

That is, about half Telecom's yield!

And some people maintain the market is "rational"?

Dividend announcement by Telecom tomorrow? I guess that's what Telecom's price has been running up for....

[craic]

As TEL is holding firm in spite of the EEC meltdown, insiders must be expecting a good number tomorrow? I still feel that the sentiment in the week or two prior to a dividend is based on insider knowledge. TEL is good and getting better. Animeart, this is the sort of stuff you make money on.

[Major von Tempsky]

Where the F is today's Telecom announcement of the latest dividend etc?

[Major von Tempsky]

Looks like our last very generous dividend was intended to carry us over until a next one in early March 2012.

Here's a timetable of dates

(so we don't really know where we stand until Wed 23 November 2011.)

The record date for the demerger is 7.00pm (NZ time) on 25 November 2011.
All eligible Telecom Shareholders who hold Telecom shares then will be
entitled to receive Chorus shares under the demerger.

Key dates - NZSX:

- 22 November - Last date Telecom shares trade on the NZSX with an
entitlement to participate in the demerger

- 23 November - Ex date - first date Telecom shares trade on the NZSX
without an entitlement to participate in the demerger

- 23 November - Chorus shares start trading on the NZSX on a deferred
settlement basis

- 25 November - Chorus shares commence trading on the NZSX on a normal
settlement basis.

[craic]

I put another $5,000 into TEL today but I was a couple of cents above the end of trade price so I lost a little, but never mind, I am a pensioner and I don't really depend on the money. I bought the Xmas turkey with Fly-Buy points and I grow my own Xmas Trees so it looks like we will survive into the new year. Like others, I find it hard to accept that I am not going to get a grand or so in my account this December to pay for presents, but never mind, her ladyship won a $299 JVC I-Pod and phone dock on Womens Weekly last week so I can probably get away with a lesser present this year. I have been out felling trees and cutting firewood over the last few weeks so I may be able to generate a few bob regardless of TEL. My vege garden is producing greens of the edible variety and my hens are laying - somewhere on the property. What i am really looking for is some intelligent discussion on the future of TEL AND the collapse of the financial markets around the globe. I think we should be talking to each other on this forum. I forgot to mention that I have thirty or forty bottles of the hard stuff under the bench in the shed to carry me over so I can remain legless though the greatest adversities and tomorrow I will go the RSA for a practice.

[Major von Tempsky]

Great stuff Craic, attaboy!

I'm keeping my powder ($18k) dry until Wed to buy some new Telecom, reputedly higher yielding than Chorus. Maybe a reason for current weakness in Tel price - others doing the same as me.

Some of the stuff the sellers take fright at makes you laugh.

Old old stories rehashed, about Tel having to pay back more to the minor Telcos for something in the past. A one off hit, presumably shared with Chorus - and then they will have run out of hits against new Tel. More legal appeals and arguments to come no doubt.

Another of the 3 rating agencies downgrades Tel one notch because of some far fetched idea that the demerged Tel and Chorus will be weaker than the old Tel.
Say again? No more targets for Com Com and agreements in place with the Government. They should be upgrading new Tel and Chorus!

Then we have the fact that 65% of Tel holders live overseas. NZ dollar goes down, Tel goes down. Absolutely no effect on Tel's trading as it hardly trades overseas, just the rump of AAPT.
NZ dollar going down is good for NZ exports and our overall economy. Though you gotta wonder why Greek and Italian weakness should have any effect on the NZ dollar as we hardly trade with them and they certainly don't invest in us. Sometimes I can't help wondering what drugs the foreign exchange traders are on....

[Jim]

Another of the 3 rating agencies downgrades Tel one notch because of some far fetched idea that the demerged Tel and Chorus will be weaker than the old Tel.er
Do you trust those rating agencies ? Remember prior to the GFC they gave Lehman Brothers a AAA rating.

[Major von Tempsky]

The rating agencies are a pack of weasels, jackals, hyaenas and vultures.

Several times governments and financial agencies have organised a responsible rescue of a country or an enterprise only for one or all (they usually follow each other) to irresponsibly put the boot in so the rescue collapses. They should be banned.

The EU is now taking action with a plan to set up some other independent European rating agencies and require organisations to choose a different rating agency every 3 years.
More power to the EU.

[Major von Tempsky]

I see that new TEL debuted on the ASX at $A1.44 (but currently $A1.46) i.e. about $NZ1.90 (or $1.93 currently). That's a bit rich! I was hoping for something lower to buy a stack more :-(

Chorus (CNU on the ASX) debuted at $A2.27 = $NZ2.99 yesterday (currently $A2.30) much weaker than expected.

Whaddya make of that?

[bung5]

Could of bought telecom and chorus for the same price 6 months ago ( $A1.46 or $NZ1.90) . could be likley that people will be selling their chorus shares and buying telecom.

[Jay]

Maybe a silly question, but how were the respective "opening" prices arrived at for TEL and CNU this morning?

TEL was it closing price minus a 5th??

[Major von Tempsky]

Actually its an intelligent question to which I unfortunately don't know the answer.
At one point in the media discussions it was said that Chorus would have about a third the revenue of the old TEL but TEL would be more profitable. The loss of about a quarter of TEL's price is maybe a compromise. The prices are set by demand and supply as prompted by media and broker comments. When the first quarterly results hit the fan in late Jan/earlish Feb we will see which brokers/media have egg on their faces :-)
It seems that the rating agencies already have egg on their faces judging by the punters reactions.

[bung5]

Maybe a silly question, but how were the respective "opening" prices arrived at for TEL and CNU this morning?

TEL was it closing price minus a 5th??

Tel would of just worked out at what people were willing to buy it at today as they thought the worth was minus chorus

[Jay]

They may have also been based on what the prices in AUS were, but then of course how were they determined
Thanks MVT and b5 - just wondered if there was some magic formula or something - apparently not :confused:

[Snoopy]

They may have also been based on what the prices in AUS were, but then of course how were they determined
Thanks MVT and b5 - just wondered if there was some magic formula or something - apparently not :confused:


Jay if the Telecom share price was $NZ2.50 before the split and you owned say 5,000 Telecom shares, you would end up with 5,000 'New Telecom' shares and 1,000 'Chorus' shares. If the Chorus shares are valued by the market at say $NZ3.00 each, then you can regard this price as being made up of 60c lopped off each old Telecom share you held (because 5 x 60c =$3). That implies the old Telecom shares have shed 60c of value with the creation of Chorus. That means the base price of 'New Telecom' is adjusted downwards by 60c from 'Old Telecom'.

In summary: If TEL closes at $2.50 on 22/11/2011
And CNU and TEL open up at $3.00 and $1.90 respectively on 23/11/2011, then there is no change in market price for 'TEL' as far as the New Zealand stock exchange are concerned.

If TEL closes at $1.95 on 23/11/2011, then the stock exchange will show it as +5c on the day, even though it closed yesterday at $2.50.

I hope that helps explain things.

SNOOPY

[craic]

I suspect that there will be little change in the TEL price. The chorus will be a bonus - either way the the combined value will be greater than the current TEL price.

According to my numbers the situation is more or lees as I thought it would be. According to my portfolio on Direct broking my chorus shares are up two grand on what I "paid' for them?

[craic]

Jay if the Telecom share price was $NZ2.50 before the split and you owned say 10,000 Telecom shares, you would end up with 5,000 'New Telecom' shares and 1,000 'Chorus' shares. If the Chorus shares are valued by the market at say $NZ3.00 each, then you can regard this price as being made up of 60c lopped off each old Telecom share you held (because 5 x 60c =$3). That implies the old Telecom shares have shed 60c of value with the creation of Chorus. That means the base price of 'New Telecom' is adjusted downwards by 60c from 'Old Telecom'.

In summary: If TEL closes at $2.50 on 22/11/2011
And CNU and TEL open up at $3.00 and $1.90 respectively on 23/11/2011, then there is no change in market price for 'TEL' as far as the New Zealand stock exchange are concerned.

If TEL closes at $1.95 on 23/11/2011, then the stock exchange will show it as +5c on the day, even though it closed yesterday at $2.50.

I hope that helps explain things.

SNOOPY

I dont think so - If you owned 10,000 Tel before the cut you owned 10,000 after the cut and 2,000 chorus after the cut.

[Jay]

Thanks Snoopy, however as craic says we still have the same number of TEL shares

My Long term Portfolio with DB show the cost of TEL as 1.9558 and CNU as 2.921

[Major von Tempsky]

Not a bad finish eh? :-)

Except if you were hoping to buy some more :-(

According to Direct Broking my Chorus shares are up 27.1cps (9.2%) at 321cps while my Tel shares are up 8.8cps (cents per share), 4.5% at 202.5 cps.

So, if I had a 1,000 TEL shares yesterday which were $2.525 that would have been worth $2,525.00 at close of play yesterday.

Today I would have had 1,000 newTel at $2.025 i.e. $2,025.00 plus 200 Chorus at $3.21 i.e. $642.00.

$2,025.00 plus $642.00 = $2,667.00.

$2,667 compared to $2,525 means a 5.6% increase today i.e. yesterday's price of $2.525 plus 14.2 cps.

If you are thinking in yesterday's terms then the price of 252.5 has increased today by 14.2 cps to 266.7 cps.

[moimoi]

Based on todays trading...is there anyone from previous incarnations of management that one can sue for not doing the split earlier.?

:-) :-)

[Jay]

Yes MVT -Not bad at all - should have bought a few more a week or so ago

[Major von Tempsky]

Not a bad article in the NZ Herald..... http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10768262

[Dubdee]

Hi

I chart using Metasock and was wondering if any of you chartists out there can confirm the method for the distribution of Chorus.

I assume I subtract 60 Cents per telecom share from the start of my data up until the split day. Is that correct?


Cheers

[Jay]

I adjusted mine by dividing by 1.28 I think it was, but not the volume.
This was based on the closing price of 2.50 on the 22nd and opening price of 1.937 on the 23rd.
Was close enough for me

[Snoopy]

I dont think so - If you owned 10,000 Tel before the cut you owned 10,000 after the cut and 2,000 chorus after the cut.


Quite right Craic. I was vacillating as to what would be a nice round number to use in my example. Settled on 10,000 shares then half way through my post changed my mind and went for 5,000. You are right. Sorry about any confusion.

SNOOPY

[Major von Tempsky]

Should be a good day today, John Key back in, IMF rescues Italy, Britain lends 40 billion pounds to small/medium businesses, interest rates go down around the world and the Dow, FTSE, DAX etc all rise heavily overnight. And the early quotes on Direct Broking - Chorus 338 338 and Tel up a cent or two.

cheers,

the Major

[Animeart]

Anybody reads those recommendations on ASB Security? They reckon TEL is worth about $2.20 but that's really not much is it? Basically only expecting another 10% gain if you buy the share for capital gain.

[craic]

I am happy to accept the $8,000 another 20cps per share would add to my kitty - and that is not taking into account the extra that Chorus has meant to me. Just because some expert puts a number on a share does not mean that the company is committed to fulfilling his prophesy. If the squatters in the park are right, we are all going to hell in the same wheelbarrow but right now i'm looking forward to Ham Turkey and Santa Claus and a bottle or two of juice.

[Major von Tempsky]

In the current world economic environment and low inflation a 10% capital gain will be regarded in retrospect as an excellent capital gain and much better than the rest of the market.

Eventually as things settle down after the demerger and brokers and analysts revise their advice a 10% gross dividend yield for TEL and 8% for Chorus will be compared against what you can get on fixed deposit with your bank and certain conclusions will be drawn.

I can see TEL's price doubling over the next 3 years as people finally wake up.

[moimoi]

""In the current world economic environment and low inflation a ""

Low inflation...??

The poxy CPI was 4.60% for the September quarter!!

[777]

""In the current world economic environment and low inflation a ""

Low inflation...??

The poxy CPI was 4.60% for the September quarter!!

Remember that is the last quarter to reflect the increase in GST in October last year.

[Major von Tempsky]

NZ dollar goes up and 65% overseas shareholders of TEL take a profit and of Chorus stag their new holdings.

I hope IRD and IRS has them for breakfast.

[craic]

Sold chorus and bought my first new car in 74 years on the planet - a Suzuki Swift 1.4ltr Limited.

[macduffy]

Well done, craic!

But in view of the musical source of the funds, did you consider buying a Honda Jazz?

Disc: Not a Honda dealer.

[Jay]

Well done, craic!

But in view of the musical source of the funds, did you consider buying a Honda Jazz?

Disc: Not a Honda dealer.
:-)

yes well done craic

[craic]

Actually went out to look at a "good" second hand car or cars around the place in the 14/15 grand range. Research pushed me towards Suzuki Swifts but they are expensive second hand and had ride in the new 1.4 limited. The speedo goes up to 200k and I am sure it would get close. Closest I came in the past was a one-year-old Chrysler Valiant VG Hemi. I went straight from a post war Ford 8 into the Hemi and I had real trouble keeping the rear wheels behind the front wheels, particularly on corners for the first week or so. I will be very happy if Telecom develop a bit of grunt soon.

[777]

Did the kiwi share go? Therefore any increase in phone rental would not be limited to inflation.

[Marilyn Munroe]

Did the kiwi share go? Therefore any increase in phone rental would not be limited to inflation.

Discussion paper about Kiwi Share, free local calling, and rural obligations here;

http://img.scoop.co.nz/media/pdfs/1106/Kiwishare_QA.pdf

If Telecom gouges its copper customers there is nothing to prevent a competitor doing a deal with Chorus, which now owns the copper, and undercutting them.


Boop boop de do

Marilyn

[777]

Thanks MM.

[craic]

Telecom might decide to make its copper customers a golden opportunity that will boost their airwave stuff and reduce copper use even further. NCU shares are dropping like a stone at present if you take a look and that usually means that insiders are dumping. I had to reduce my "at market" sell order twice in the last couple of days because the market dropped 3cps on the current at market. I thought that sales were made at market regardless of that figure but it seems that at market is at the figure at the time of the order and remains at that even if the market drops.

[Jay]

Telecom might decide to make its copper customers a golden opportunity that will boost their airwave stuff and reduce copper use even further. NCU shares are dropping like a stone at present if you take a look and that usually means that insiders are dumping. I had to reduce my "at market" sell order twice in the last couple of days because the market dropped 3cps on the current at market. I thought that sales were made at market regardless of that figure but it seems that at market is at the figure at the time of the order and remains at that even if the market drops.

I would not have thought so - well not in my limited experience. thought it would be at a price "they" decide to match it with, usually lower for people like you and me than the bigger clients.

Sold my CNU as well the other day - not enough profit to but a new car though, maybe a new tyre!

[Major von Tempsky]

Kiwi share has gone, definitely.

No regulation = no regulation, full stop. Yep TEL is a good bet.

The one's who have egg on their face are all the analysts quoted higher up this thread who quoted indicative prices for Chorus/CNU which continues to drop like a stone.

Presumably its a combo of CNU dropping out of the ASX 200 and getting a BBB credit rating and borrowing rather more money than anticipated "because the funds were available".
Maybe the sentiment is now sell CNU because Tel are a better bet which is the reverse of the sentiment a week or so ago.

Whoever said the markets are rational.

It's weird isn't it.
Here's Chorus which is subsidised, guaranteed, funded, backed by the NZ Gov't, which just a week ago all the analysts were saying was a better bet than TEL and as safe as houses and now all the investors are running from it as its suffering from a combination of bubonic plague and AIDS.
Anyone else got some thoughts on this?

Hallelujah! Incroyable. Its just risen 2cps. Was beginning to think we were all in a scene from Alice in Wonderland.

I mean if the market crashed badly there's only 2 companies that would still be standing because of government involvement - Chorus and Air New Zealand. Have some of the dillbrain overseas investors finally realised this?

[Animeart]

I actually changed my view recently and now prefer CNU over TEL. Correct me if I'm wrong but isn't CNU the bigger winner out of the UFB deal than TEL? CNU now has at least 70% of the market share, whereas TEL is now focusing on retail which means competing with the likes of Vodafone, 2 degree & many many others. TEL's price hardly moved at all since the split, and I have to say that's hardly to everyone's liking. The recent big swings in CNU prices seems normal, on the other hand, and I would say $2.93, the listing price, is a good indication of when to get in. Have you noticed the volume too? CNS is trading at 50-70m just about every day, whereas TEL is down to only about 20m.

I don't think the dust has settled yet on CNU, and the recent high volum supports my suspicion that it's just a lot of big players topping up on their portfolios. Don't forget that CNU was initially only available to existing TEL shareholders, which means buying on the market is the only way for some to get their hands on CNU. Some of the bigger players might not like buying the old TEL in order to get CNU either, so waited until after the split to start buying. A lot of the mom and dad shareholders are too easily spooked by the recent drop and decided to sell early in case it keeps dropping like the old TEL over a year ago, hence you see prices falling to as low as $2.91 today.

TEL might still be more attractive in terms of dividend yield, but I reckon CNU is better if you're more interested in capital gains, both short and long terms.

[Major von Tempsky]

Some good points Animeart - couldn't help wondering who ws selling out to move CNU down from its high of $3.40 to as low as $2.91.

Must be some big investors beholden to the ASX200 index that CNU has fallen out of as well as stags and spooked Mum and Dad investors. And dumb other overseas investors who somehow link NZ to Greece, Italy, Ireland, Spain and Portugal - although its a real strain to see the connection from down here. Ignorant Americans who don't know where NZ is or understand our economy. The % of our exports going to PIGIS must be infinitesimal.

But they should all be all one off sellers allowing CNU to migrate upwards towards one analysts prediction of $5.00.

[craic]

Copper is about where the horse was in 1930 - a much loved symbol of a passing age. Fibre is a bit better but I know an awful lot of people who operate solely on a cellphone and a high percentage of them are beneficiaries and others who "can't afford" the monthly bill. CNU may go up and down but TEL are close to a monopoly in the "wireless" area and they are now unregulated - well as much as anything is unregulated in this country - and I would expect a big move ahead in this company. I may have given the impression that I quit CNU and then decided to buy a car from the proceeds - not so. I decided on the car and then scrabbled around for the money. I tossed up between cnu and SKC and decided from there.

[Major von Tempsky]

Well done Craic!

But the big thing now is this capital restructure/capital return to TEL shareholders.

Paul Reynolds said yesterday it would be announced in February with the March dividend statement.

TEL only took on a third of the debt of the old TEL (CNU took the rest) and has scope for a return of capital and more borrowing. Maybe Snoopy can work out for us how much would be available for TEL to increase to a "normal gearing".

Speculation, please on how much.

What r u going to do with the money? I intend to reinvest it in more TEL shares to up my dividends.

[Hoop]

.....

What r u going to do with the money? I intend to reinvest it in more TEL shares to up my dividends.....



NZ dollar goes up and 65% overseas shareholders of TEL take a profit and of Chorus stag their new holdings.

I hope IRD and IRS has them for breakfast.

.....

Must be some big investors beholden to the ASX200 index that CNU has fallen out of as well as stags and spooked Mum and Dad investors. And dumb other overseas investors...
.........But they should all be all one off sellers allowing CNU to migrate upwards towards one analysts prediction of $5.00.

MVT ...have you sold CNU? :confused:
If so...which category of investor do you consider yourself to be :confused:...........big overseas investor??..nah...you wouldn't be a stag in drag?..surely not;)
I wonder whats on the IRD breakfast menu today :confused:

Europe's secret talks ..MVT spooked....Life's full of surprises, unanswered questions and uncertainties atm...eh

I wonder whats going to happen next?:D

[Animeart]

So the next dividend pay out for TEL shareholder is in March 12? Nothing for the Dec month as in the past? I believe CNU shareholders has to wait till Jun 12, but that's understandable.
I'm expecting CNU prices to be less volatile, compare to TEL, due to it not being available to traders in N America, henece it should be less susceptible to the ups and downs in global economy. This combined with the fact that it has a government contract tied up in the medium term.

[Major von Tempsky]

Nope Hoop, I'm not a stag in drag, still holding CNU and in fact I bought some more and some more TEL with the profits from my Charlies exercise (where of course for the benefit of IRD, one was compulsorily bought out and I had bought with the expectation of future dividends ;-) ).

Unfortunately Animeart, because demerger took place on 30 November old TEL no longer existed to pay us a Dec dividend and I guess that's why they paid us a much bigger one than normal in September, 9.5cps. And it's been Chorus that has been the volatile one, hope it settles down.

[craic]

I'm pretty sure that TEL announced months ago that they were going to go to half-yearly dividends.

[Animeart]

I think TEL changed the announcements to twice a year, but should still be paying quarterly dividends, judging by the expected payout in Mar next year, which works out to be the same as in the past - Mar, Jun, Sept & Dec.

Must say I was surprised with TEL’s movement today. Was expecting it to fall below $2 in line with the US market. I’m guessing it might have something to do with the interest rate cut in Europe and Oz this week, which means that shares with high dividend yield are becoming more and more attractive. It's still a long way from CNU's high a week ago though, percentage wise. By my calculation TEL is just over 9% up from the split price, while CNU reached as high as 16%. Anyway, I think most analysts are waiting for each company's next report card in order to get a better idea of their business. Shame that I didn't hold on to my TEL but I personally would not pay over $2 to get back in.

[craic]

When I was in London last year my TEL holding went down as far as 185cps. With the present price and the Chorus result means a net gain of about 30G for me and that does not include dividends. I would put TEL head and shoulders ahead of CNU. When the dust settles, I intend to use any cash over from the CNU shares to buy a few more TEL - at any price.

[Major von Tempsky]

Here's the answer lads! Latest from the hard to find and get into TEL Investor Centre.

Definitely half year announcements and dividends and all will be revealed next month in February? Salivate, salivate and a Happy New Year to you. Bonne année à tous!

"Dividend Policy and Long-Term Capital Management

Long-term capital management

Telecom intends to adopt a capital structure consistent with maintaining an ‘A Band’ credit rating. To that end, Telecom intends to manage its debt levels to ensure that the ratio of net interest bearing debt (inclusive of associated derivatives) to EBITDA does not materially exceed 1.1 times on a long run basis, which for credit rating agency purposes equates approximately to net debt to EBITDA of 1.5 times. The difference between these two ratios is primarily due to the capitalisation of operating leases. Telecom currently has the following long-term credit ratings: Standard & Poor’s A- (outlook stable) and Moody’s Investors Service A3 (outlook stable).

Ordinary dividends

The Telecom dividend policy will be determined by the Telecom Board at its discretion and may change over time. For FY12, Telecom will move to paying dividends on a semi-annual basis. Telecom will declare its next dividend in February 2012.

It is anticipated that for FY12, Telecom will continue with the existing dividend policy, to target a payout ratio of approximately 90% of adjusted net earnings, subject to there being no material adverse changes in circumstances or operating outlook. It is envisaged that an interim dividend will be paid based on a combination of Telecom’s pre-demerger adjusted net earnings and Telecoms post demerger adjusted net earnings.

Dividends paid are expected to be imputed on the extent possible and the dividend reinvestment plan will remain in place."

[craic]

Great info, MVT. And I think we will all benefit from the change by virtue of the fact that all the witless ones who like to point out that TEL "only paid 7cps as an interim dividend" no longer have to be corrected with the information that the dividend is a quarterly dividend. The greater published dividend (hopefully) will excite more interest in the share. I would like to be able to afford another new car next year from the growth - all Lotto could do for me this year is a couple of twenty-odd dollar dividends.

[troyvdh]

..this may be out of left field...(in fact it probably is)....but has not todays share price performance...of both entites ....highlighted the fact that in NZ most folk hate/deplore Tel in any form...given their internationally acknowldeged history of over charging/ripping off the folk of NZ.......

PS...have folk forgotten the fact that a previous boss of TEL acknowledged (M Gatting) told a Parlimentary investigation that stated that "unbundling" would result in the downgrading of the TEL SP....which would naturally flow on to investment funds in NZ.....this opinion was not conveyed ..to the NZ public....instead "we" were told that there was no advantage in allowing more competitors in the "MKT"....

[Major von Tempsky]

"way out of left field"?

Certainly is - if you mean left as in left wing/socialist. I'm constantly amazed by the wide variety of raving looney left who haunt this site.

By unbundled do you mean demerged?

I think you are wallowing in the past, its a new reality and totally different from the previous reality. You are like the generals who became expert in fighting the last war only to suddenly find they were emgaged in a new totally different war.

Nobody's ripping consumers off in the NZ telecoms area, in fact its all tooth and claw, red meat, blood and screams and ruthless competition between enterprises.

People invest in NZ shares not to indulge their political prejudices but to make money - either capital profits or a good income stream or both.

Those who can, do. Those who can't, teach. Or on Sharetrader, preach.

[craic]

I am happy with Telecom service and delivery - my son who is a top expert in the field of data delivery and protection for one of the worlds biggest, working out of London is happy with Telecom when he uses it here, as he has to when he stays with me and my other son, a consultant, locally, is happy with the company. The biggest problem in the whole electronic data system is with people who don't know what they are doing and then blame blame the machine because it did what they told it to do and not what they wanted it to do. I am old and easily frustrated by my own inadequacies in this field but I usually sort the problem outby looking for what I did wrong. As to cost - you get what you pay for and what you deserve .

[BIRMANBOY]

"way out of left field"?

Certainly is - if you mean left as in left wing/socialist. I'm constantly amazed by the wide variety of raving looney left who haunt this site.

By unbundled do you mean demerged?

I think you are wallowing in the past, its a new reality and totally different from the previous reality. You are like the generals who became expert in fighting the last war only to suddenly find they were emgaged in a new totally different war.

Nobody's ripping consumers off in the NZ telecoms area, in fact its all tooth and claw, red meat, blood and screams and ruthless competition between enterprises.

People invest in NZ shares not to indulge their political prejudices but to make money - either capital profits or a good income stream or both.

Those who can, do. Those who can't, teach. Or on Sharetrader, preach.

Well said MVT.

[troyvdh]

..."raving looney left"......hardly.

You know Herr Tempsky I have visions of you standing hitler-youth like in your lederhosen chanting "profit profit......"

Re wallowing in the past...I love it when folk like you say that....Yep she is new way better reality now.....yeah right

So you thnk that its defensible fo a boss of a company (ist or 2nd biggest in NZ) to stand in front of government representatives lobbying for protection from compettion because it will have dire consequences for the share price !!!!

Is it not true that NZ has expensive cell charges in the world

Is it not true that NZ ers have one of the highest use of txts in the world...because the costs of calls are so high...

Is it not true that telecom/vodaphone make the highest profit margins on txts

And finally tell me why in many 3 rd world countries around the world...folk may live in mud/canvas huts...but a lot of then own cell phones....

I have no problems making dosh...in fact a decent proportion of my life is spent just doing that....

PS ...Despite having a few CEN shares ...I have been in communcation with them complaining of there prices and practices...in fact I switched 3 accounts to Genesis ...between 1/4 and 1/3 cheaper.

[Major von Tempsky]

Ha! ha! Troyvdh - very droll.

The explanation came to me earlier today. The clue is in the first 3 letters of your moniker, to wit "Tro".

The rest of it, disguised, goes "ll". Troll.

Yes that's right, the nuisances that go round discussion boards on the Internet or work LANs making deliberately inflammatory statements with tongue in cheek to see "what sort of bite they can get". What a bore.

They used to be more common than they are now and you're one of the old unreconstructed ones.

The solution used to be be (a) warned by the moderator if any (b) banned from the database or transferred sideways to some harmless place until they left or if they managed to sufficiently provoke people they were then fired.

Failing that people just developed a conditioned reflex - "Oh no not Troyvdh again, yawn, he's a troll, ignore him, don't even bother to read him. The joke, if there ever was one has worn so thin it's totally transparent. Why doesn't take up knitting or solitaire."

As you seem to have deliberately missed the point, this thread is for discussing Tel (and to a lesser extent CNU and TLS) as an investment. Anyone who wants to do that rationally and knowledgably I'll engage with them. You, I shall pointedly ignore. No doubt this will draw yet another stupid diatribe from you which I will ignore. I look forward to Snoopy or Craic or other constructive posters so we can get a useful discussion.

[Lizard]

Bit over-the-top, MvT... Troyvdh always been a respected poster in my books.

[troyvdh]

...wow Major....I had to read your post 4 times to make any sense of it.....why are you so angry and defensive....why have you challenged my post with a tirade of idealogical nonsense....instead of a reply with some substance.
You are angry...that is clear....you dislike folk who challenge your "abundant ebulliency" for TEL......
I really enjoy folk who are passionate...you must surely be an individual just out of there teens.

[percy]

Bit over-the-top, MvT... Troyvdh always been a respected poster in my books.

I too repect Troyvdh as a poster.

[karen1]

MVT, you just cannot help yourself, can you? Were you born this way, or have you had to work at it?

Do you not realise, can you not see, you come across as arrogant and conceited, quite apart from extremely rude, derisive and abrasive. If that is your aim, you have achieved it - it would be sad to think that satisfies you.

Are you completely sure this is the forum you should be on, or is there one available to you whereby you can post unpleasant posts to your heart's content, amongst other likeminded posters and not here on ST, where most of the posters are a quite decent lot, who are willing to give of their knowledge/experience readily, without showing any signs of superiority.

[Stranger_Danger]

Wow MVT, what an emotionally unbalanced outburst - perfect mindset for share investing. Not.

Can you post a list of your longs so I can short them?

[Halebop]

Bit over-the-top, MvT... Troyvdh always been a respected poster in my books.

Ditto. Troyvdh is often insightful and his posting style entertaining.

[Snoopy]

So you think that its defensible for a boss of a company (1st or 2nd biggest in NZ) to stand in front of government representatives lobbying for protection from competition because it will have dire consequences for the share price !!!!


As a Telecom shareholder I would expect the CEO to go into bat for all stakeholders and that includes shareholders. So yes I would expect the CEO to represent company interests. However I do accept that the CEO can misjudge the political landscape. In the case of Telecom former CEO Theresa Gattung did, and lost her job as an indirect consequence. I see no necessity to punish Telecom further. The shareholders at the time certainly paid their dues as well.



Is it not true that NZ has expensive cell charges in the world?


Don't know about absolute level of cellphone charges. I would guess that due to NZs mountainous terrain and dispersed nature of the population, NZ is possibly the most expensive country in which to construct and service a cellphone network in the world.



Is it not true that NZ ers have one of the highest use of txts in the world...because the costs of calls are so high...


Certainly in the past I think this was true, yes.



Is it not true that telecom/vodaphone make the highest profit margins on txts


I know that in times of disaster, the people are urged to text rather than call. I guess that is because of the lighter footprint texting leaves on the mobile network. However since it is the same as the mobile voice network I would guess the highest profit margins are on voice calls.



And finally tell me why in many 3 rd world countries around the world...folk may live in mud/canvas huts...but a lot of then own cell phones....


Because there is no legacy fixed line network. In the third world setting up a wireless network is obviously cheaper.

SNOOPY

discl: TEL and CNU shareholder

[macduffy]

And about time discussion here returned to the subject of the thread

"Telecom v Chorus"

What are the investment merits of the two companies now that the split has been made?

Or do we just conclude that Chorus is the boring but reliable infrastucture income stock while TEL is the sexy, high risk comms stock?

[craic]

Chorus is the pipes and posts and wires etc. Still an essential part of the communications system but more likely to decline into obsolescence with time. Telecom might be completely airborne in our lifetime.

[Major von Tempsky]

Thought u guys might be interested in the following excerpt from Granny Herald - "Business in 2012 - Crystal Ball Gazing"

"Mobile force

Telecom will make a far more aggressive play in the market next year than in the past, according to one analyst.

Free from regulatory restraints after splitting with its network arm Chorus in November, the slimmed-down Telecom retail will want to assert itself, particularly in the mobile market.

IDC analyst Rosie Spragg predicted Telecom retail will look to up the competition and attract customers in Auckland, traditionally a stronghold of Vodafone.
"

Craic, I did read an article in The Economist once that the ultimate future of telecoms is in fibre optic, that it will surpass radio. I also read in a recent Economist that there are terrible stoushes developing in the US for example over shortages in radio spectrum available vs the demands on it.

cheers,

The Major

[craic]

The "radio spectrum" is itself,an old concept based on limited understanding. Until a few decades ago light, sound, radio and anything else that "moved" was seen to depend on a substance that filled the universe, an ozone that was ill defined. Finally, space travel established that it didn't exist. At a major conference, when the implications were examined, one scientist remarked "Has anybody told God?" Fibre optics simply sends more signals down a "wire" than anyone thought possible a few years ago.The radio spectrum usage is crude beyond belief.