NZ stocks: Telecom dividend keeps them guessing

By PAUL PANCKHURST

Sharemarket analysts are split on whether Telecom, the country's biggest listed company, will lift its quarterly dividend in Thursday's result announcement.

At sharebroking firm Forsyth Barr, Jeremy Simpson predicted an unchanged 5c dividend per share, with the company holding off for another three or, more likely, six months.

A report from ABN Amro analyst David Boyce argued the increase - possibly to as much as 9.25c - would be immediate. Telecom has been cutting debt to meet the gearing targets of credit rating agencies.

Boyce said this week's result for the second quarter - the three months to December 31 - would show that the company was meeting those targets and on track to keep meeting them.

The higher dividend would flow from those facts.

Simpson, on the other hand, said Telecom was very close to its targets but would not "comfortably" exceed them until the third quarter.

That meant an increased dividend was likely later rather than sooner.

Overall, analysts expect the company to announce a first-half bottomline profit of $361 million - up 20 per cent on the same period last year.

However, $28 million - or nearly half of the expected improvement - is a one-off profit from the telco's sale of a 12 per cent stake in Sky Network Television.

Analysts expect earnings before interest and tax (ebit) for the six-months to be $697 million, an increase of two per cent. The forecasts are a consensus of the predictions of 12 analysts,

The analysts expect ebit of $352 million, up slightly on last year's $341 million. The consensus for net profit after tax is $199 million - or $171 million if the gain from the Sky shares is excluded.