KEY POINTS:
Telecom's small shareholders are increasingly pessimistic about the company's long-term prospects as the once-mighty titan continues its southward slide in the sharemarket following Government regulation over two years ago.
Its market capitalisation - which once accounted for more than 20 per cent of the stock exchange - has dwindled to around 10 per cent as the share price hit lows not seen since the early nineties.
While those that bought during the initial share float would have by now recovered their investments - and more - thanks to the company's historically generous dividend payouts, others who got in more recently would not have been so fortunate.
The 35,000 small investors owning around 10 per cent of the company have seen their investment shed some $290 million since June 2006 - a month after the Government finally acted on threats to open up the company's network to competitors.
Many blamed the Government and Communications Minister David Cunliffe for the downward trajectory, but equally some saw it as the consequences of Telecom's lack of infrastructural reinvestment over the past decade, and a complacency over its monopoly position.
Investor Roger Murray's 8000 shares have more than halved in value in the three years he's held them. He was also among the 50,000 Auckland Airport retail shareholders who saw the takeover attempt by the Canada Pension Plan Investment Board stymied by the Government. Not surprising then that he has no love lost for the Government.
"What's really annoyed me is that the Government's come along into a private firm, cost them millions of dollars to split the whole place up and for what? It's just absolutely outrageous really."
Another investor feels similarly aggrieved.
"This Government has penalised our largest NZ company, needlessly destroying shareholder value [and without compensation], to the benefit of overseas-owned competition.
"I am critical of Telecom's former management, particularly [chairman Rod] Deane, but their intransigence should not have been the reason for wielding such a blunt axe to reform the industry."
But one Auckland investor, who bought into the company around seven years ago when the shares were around $7.80, said Deane and ex-chief executive Theresa Gattung had a lot to answer for.
"They misread how long they could keep the bluff up against the Government. I'm not a Labour voter, but it's one of the best things they've done in their nine years."
Christchurch investor Max Smith noted that the share price collapse was not entirely due to internal management or the Australasian marketplace.
"The American credit crisis has generated the flight home of foreign investment capital much in the same way as Rome withdrew its legions from the far reaches of the empire to defend the city from the barbarians.
"This imposed on the former occupied territories an unwelcome expose to the cold blasts of a cruel world. There was little Telecom management could do about that."
Another investor who got in when the stock was first floated at $3 a share was not too concerned about the company's prospects.
"Owning Telecom was a licence to print money in the 1990s. I probably should have sold the shares - around 1500 - when they were worth $8 or $9 or more.
"But I didn't because they have paid a big dividend over the years which long ago recompensed the cost of the original investment while also providing a healthy return. They are still paying a good dividend in terms of dividend yield ratio.
"All of this makes me relaxed about the future of the company which may be chequered. It is obviously under huge threat from competition and technology changes. But I have made enough money out of them not to worry."
Those who bought more recently, like Murray will hang on to the shares.
"You don't lose money till you sell. And they're bound to come right again when they get A into G I would say."
BY THE NUMBERS
* Around 5000 institutional investors hold 90 per cent of Telecom. The remainder is held by some 35,000 small investors.
* Telecom's market capitalisation at June 2006 was $11.8 billion. Now it is $5.1 billion - a 56.7 per cent decline.
* But shareholders have received $3.8 billion back in dividends over the same period. This includes the $1.1 billion capital return (as a special dividend) to shareholders from the Yellow Pages Group sale in April last year.
* In total, shareholders have lost $2.9 billion since June 2006 - a return over three years of -24.6 per cent.
THE MEETING
* Telecom has its annual meeting tomorrow at 10am in the Duxton Hotel in Wakefield St, Wellington. Among items shareholders will be asked to vote on is Elliott International's nomination of Mark Cross and Mark Tume as directors.
