KEY POINTS:
Telecom's annual meeting this morning will see directors Rod McGeoch and Kevin Roberts face off against rebel nominees Mark Tume and Mark Cross - selected by agitator shareholder Elliott International.
Shareholders in Wellington will meet with the share price wallowing below its 1991 float value of $3.
It is a boardroom battle that goes to the very heart of New Zealand's largest publicly listed company and the role of the company in the telecommunications business.
The full-on assault by Elliott has surprised investors and industry players alike.
They wonder why New York-based Elliott has made such a big effort for a relatively small investment.
NZ Shareholders Association chairman Bruce Sheppard doubts Tume and Cross will be elected to the board. He said Tume had "shot himself in the foot" and the two men should not have linked themselves to the Elliott campaign of "storming the barricades to get onto the board".
Telecom's share price slump - it closed last night at $2.82 - is hardly unusual in the global financial crisis.
But long before the dramatic events of the banking collapse, there was friction over its future and expectations for its financial returns.
After years of providing investors good returns it was embarking on a new business plan where it had to embrace more competition. Under chief executive Paul Reynolds, Telecom has settled into that role.
But Elliott International complains the company has been underperforming. It is challenging operational separation and calling for a bigger break-up in the company - structural separation.
That would probably mean spinning off the retail division, providing a one-off gain but limiting its chances for continuing as a vertically integrated company.
Are the "Two Marks" a cipher for Elliott?
Tume is a well known and respected company director and Cross has returned from Europe with a strong background in infrastructure firms. Both insist they are nominated for independent roles and not tied to Elliott's calls for structural separation.
But their selection at today's meeting would signal a serious challenge to the plan.
Telecom chairman Wayne Boyd has strong backing for his views. He wants to retain McGeoch - the chairman of SkyCity Entertainment and a longtime board member. And with the departure of Patsy Reddy, Boyd was behind the nomination of Kevin Roberts, the high profile global chief of Saatchi & Saatchi.
The selection of Tume and Cross appears slim since proxy advisers to US foreign investors have already indicated they support the board nominees. But interest in the meeting is still wide due in part to inordinate efforts by Elliott and its virulent public relations attack on Telecom's performance.
And there is a chance of a surprise win that might have a big impact on Telecom.
Sheppard says operational separation - maintaining divisions that operate alongside competitors - can resurrect a vertically integrated player.
But with structural separation - which is permanent - it cannot. "You do have to wonder why the two Marks would have to want to be embroiled in this way to find themselves on the board," Sheppard said.
