KEY POINTS:
Investors are hoping Telecom's briefing for financial analysts on Thursday will clear the murky future for New Zealand's biggest publicly listed company.
And the company says it is aware of expectation for the briefing, which one analyst said could define the leadership of chief executive Paul Reynolds.
The question being asked for the sharemarket and the telecommunications world was pinpointed in a report by telecommunications analysts IDC this week - will Telecom maintain its profitability now regulation has taken away its ability to shut competitors out of the telecommunications market?
Telecom has been in upheaval for two years since the Government lost patience and announced legislation splitting the company into three divisions.
In February, Reynolds announced a "disappointing" interim result for the year to December 31 - down 3 per cent on the same period last year.
Telecom had dropped the ball with under-performance in key areas like mobile phone communication.
Reynolds warned financial results would get worse before they got better as Telecom adjusts to meet a new structure.
Six months after he had replaced his predecessor Theresa Gattung, Reynolds declined to comment on his vision for Telecom.
He said the April 10 analysts briefing in Sydney would explain the way ahead.
Last month analysts at ABN Amro gave a withering critique of the company and its future and predicted Telecom would announce at the briefing that it was reducing its dividend.
ABN Amro analysts said they expected Telecom to announce a reduced interim dividend - from 7c per share to 6c - at the briefing. They spelt out the urgency for Telecom to explain itself, issuing a note last month lamenting concerns the briefing would pass with Telecom's direction still unclear.
Spokesman Mark Watts said the April 10 briefing would be comprehensive with addresses from Reynolds and leaders of its three divisions - wholesale, retail (including mobile) and the networks division Chorus.
"It will provide a clear idea of the future. It is an important moment and culmination of strands of work," Watts said.
Guy Hallwright of sharebroker Forsyth Barr says it needs to be forthright.
Telecom had to explain how it would deliver better returns, he said.
Hallwright says that the lofty Scotsman - he stands just over 2m tall - has kept a low profile apart from his involvement with the separation of the company.
"After the April 10 briefing we need to have confidence Paul Reynolds is really getting a grip on the company and that he is going lead it to better returns," said Hallwright.
"Everyone is waiting for Reynolds to place parameters around where Telecom is going and the efficiencies from next generation investment in its new mobile phone network."
He said there were limits on new revenue and all incumbents were challenged.
"I am most interested in what they can do on the cost side."
But he said that after redundancies there were no signs that Telecom staffing was bloated.
For his part Reynolds has noted that separation of the company - completed last Monday after negotiating up to the early hours of the morning - was a major event in its own right.
It did so while unbundling the local loop and embarking on cabinetisation - laying fibre optic cable to make fast broadband more available to consumers.
"Separation day last week was a significant milestone for Telecom New Zealand, and indeed for the industry as a whole," he said.
Telco analysts IDC forecast Telecom will continue to dominate New Zealand's telecommunications market, albeit with considerably less margin and considerably stronger competitors breathing down its neck. "There will be a difficult two-year financial, cultural and operational transition, and Telecom risks a significant erosion of market share during this period.
"It will no longer be the battle of the heavyweight vs featherweight; one or possibly two competitors will begin to fight in Telecom's weight class, while other regional, business and specialist providers will use their nimbleness and innovation to get under Telecom's guard to score direct hits."
But according to IDC, Telecom will, in response, focus on its convergence and bundling capability, broaden its IT services portfolio for the small to medium sized market, and seek to tap into services demand that will in turn drive broadband uptake.
