Vector Limited (VCT)

[JAYAY]

ComCom does it again. Good ole ComCom doesn't want investment in NZ companies.

www.nzx.com/companies/VCT/announcements/256981

[Biscuit]

ComCom's process for decision making is pretty robust though, hard to argue with, and it consults very widely: "On 23 June the Commission released a further process update paper, and a number of expert reports written for the Commission on the choice of the WACC percentile. The reports were prepared by a number of expert advisers and firms engaged by the Commission: Professor Ingo Vogelsang of Boston University, Professor Julian Franks of the London Business School, Associate Professor Martin Lally of Victoria University of Wellington, European economic consulting firm Oxera, and the Australian consultancy Economic Insights"

discl: small holdings in regulated companies

[Balance]

ComCom does it again. Good ole ComCom doesn't want investment in NZ companies.

www.nzx.com/companies/VCT/announcements/256981

Not true - Vector has relentlessly revalued its assets up over the years so that it can keep charging up its prices. Meanwhile, it ploughs back bugger all into line upgrades and cries poverty even while it pays out big dividends. Typical monopoly which needs regulatory overseeing.

[JAYAY]

ComCom's process for decision making is pretty robust though, hard to argue with, and it consults very widely: "On 23 June the Commission released a further process update paper, and a number of expert reports written for the Commission on the choice of the WACC percentile. The reports were prepared by a number of expert advisers and firms engaged by the Commission: Professor Ingo Vogelsang of Boston University, Professor Julian Franks of the London Business School, Associate Professor Martin Lally of Victoria University of Wellington, European economic consulting firm Oxera, and the Australian consultancy Economic Insights"

discl: small holdings in regulated companies

Ha ha, "expert advisers and firms engaged by the commission" says it all.
The outcome depends on who chooses the "expert" advisers and firms.
As any businessman will tell you you only engage the "expert advisers" that suit your purpose.

[Biscuit]

Yes, I guess that is true. Although I suppose the purpose of the Commission is to find a formula that ensures continued investment at the lowest price to the consumer?

[Harvey Specter]

Not true - Vector has relentlessly revalued its assets up over the years so that it can keep charging up its prices. Meanwhile, it ploughs back bugger all into line upgrades and cries poverty even while it pays out big dividends. Typical monopoly which needs regulatory overseeing.

revaluations have no impact on the regulated asset base. They may have in the past but not any more.

I wonder if it is the time for the AECT to take this private. That way profits become irrelevant (for those in the AECT area) - ie. any 'profits' gets rebated back to consumers through a lower line charge.

[Biscuit]

From the point of view of AECT, which owns 75% of VCT, it's best if there is co-ownership outside AECT and prices are as low as possible?

[Harvey Specter]

From the point of view of AECT, which owns 75% of VCT, it's best if there is co-ownership outside AECT and prices are as low as possible?

Not sure. Higher profit is probably better as the beneficiary aren't the only customers of VCT. Higher profits are redistributed as dividends to beneficiary's, not to all customers which a lower prices would do.

[Biscuit]

That's probably right, and is why VCT complain about the Commission. I've held shares in VCT since 2009 as a very small part of a diversified portfolio. They are unspectacular but safe and the Commission is unlikely to ever change that in my opinion.

[BlackPeter]

interesting market reaction following the ComCom decision - SP up 2% (or 5 cents). Looks like the market is pleasantly surprised?