KEY POINTS:
Telecom's share price slid further yesterday, attributed more to lingering concern at its profit announcement than a bid by investor Elliott International to get two independent directors on the board.
Telecom closed down 3c at $3.33 in the wake of Friday's announcement its operating profit fell 15.5 per cent to $713 million.
The aspiring directors, Mark Tume and Mark Cross, were keeping a low profile yesterday and could not be reached for comment. New York hedge fund Elliott wants a structural separation of the retail business from the remaining wholesale and network business, rather than just an operational split which the Government has agreed to.
Elliott owns 3 per cent of Telecom, and says that so far there is not a wider concerted effort behind its move.
One New Zealand fund manager said other local managers had not been contacted by Elliott.
He said it would be unusual to put a name forward for a board without being confident of being elected.
Without that, nominees who failed risked public humiliation.
The drop in Telecom's share price yesterday could be attributed to the disappointing result announced last week, rather than the board play by Elliott, he said. Another fund manager which does not hold Telecom shares said it was a useful debate for shareholders to have and the board needed to consider bringing on fresh talent.
Those who know Tume say he is adept at handling his wide range of directorships and government appointments. Cross, who has wide financial sector experience in Sydney then London, is less well known.
Telecom's board can have up to 12, the majority of whom have to be independent. Non-executive directors are paid a base rate of $140,000 a year and there are eight full board meetings.
Shareholders' Association chairman Bruce Sheppard said breaking Telecom up structurally would add a layer of management and head office overhead and operational inefficiency that reduced net profit without increasing revenue. The company was already doing what it could to improve customer focus and did not need more change.
Sheppard said he was surprised Tume and Cross did not front up. "If you are going to take a profile in a public company and charging in from the outside, then you'd think they would front up to show off their wares," he said.
They will stand for election at Telecom's AGM on October 2.
THE BIG GUNS
Telecom's largest stakeholders:
* Commonwealth Bank of Australia - 10.59%
* AXA - 8.79 %
* Macquarie Group - 8.26%
* Westpac - 7.54%
* Lazard & Co - 6.15%
* Mondrian Investment - 5.57%
Source: Bloomberg
