Telecom a good call in bad investment market

By JIM EAGLES

Telecom's share price may be suffering but it has been one of the best performing telecommunications companies in the world in the past two or three years.

However, with telcos globally falling out of favour with investors, the achievement is more a matter of being one of the least bad.

To benchmark Telecom's performance, international consultants Stern Stewart compared the share price movement in 13 telcos around the world in their local currency.

In the 12 months to the end of February they found Telecom's share price depreciated by 16 per cent. Not great, perhaps, but the only telco in the list to do better was America's AT&T, which went right against the trend and appreciated by 20 per cent.

Over the past two years, which perhaps give a better perspective, Telecom produced the best performance, its share price depreciating by just 9 per cent. In that timespan AT&T went down by just over 10 per cent, Australia's Telstra by over 18 per cent and Britain's Vodafone by 22 per cent.

Others were worse, with shares in Britain's Cable & Wireless dropping by 72 per cent and Canada's Nortel by 67 per cent.

Over the past three years Telstra has been the best performer, depreciating by 18 per cent, with Telecom next at 21 per cent, followed by Singapore's SingTel at 22 per cent.

When Stern Stewart extended the analysis back five years, Telecom's performance (down 12 per cent) was still comparatively good.

The best performed telco share over that period has been Vodafone, which was up just under 1 per cent, followed by Spain's Telefonica with no movement, Telecom Italia (down 2 per cent), Telstra (down 4per cent), and Hong Kong's PCCW (down 7 per cent).