KEY POINTS:
Telecom has halted its dividend reinvestment plan and on-market share buyback while it evaluates accelerating the delivery of broadband services.
Telecom shares fell 3c to $3.09 around noon after the announcement. The shares are down from $4.63 in October last year.
Telecom is still paying its eight cent a share quarterly dividend on September 12 but will not allow shareholders to receive shares instead.
"Shareholders who have elected to participate in the dividend reinvestment plan will receive a cash dividend at the same time as dividends are paid to shareholders who do not participate in the dividend reinvestment plan, ensuring that all shareholders are in an equitable position."
Telecom said it decided to suspend the plan and the share buyback because of the previously announced evaluation of opportunities to accelerate the delivery of national WCDMA broadband mobile coverage at 850mhz was strategically important and material.
New Zealand Shareholders' Association chairman Bruce Sheppard said the decision was wise because the share price was so low.
"They are making two very positive statements to the market if you think about it. The first is that our share price is too low and we are not comfortable issuing shares at this price," he said on Radio New Zealand.
The second message was that even though the shares were cheap the company had better things to invest the money in.
Separately the Commerce Commission released its draft determination on what Telecom should charge competitors for space in its road side cabinets.
The "sub loop unbundling determination" removes the need for separate contracts between Telecom and its competitors.
The loop is the copper telephone wire from the cabinets to houses and other buildings that has always been so difficult for competitors to replicate nationally.
The determination suggests a monthly rental charges should be $11.99 for urban areas and $22.14 for non urban.
"This draft determination is the last in the current series of determinations to improve competition in broadband telecommunications markets," said telecommunications commissioner Ross Patterson.
"Sub-loop unbundling will allow Telecom's competitors to offer high-speed cabinet-based services by taking advantage of the shorter copper loops that result from the cabinetisation process.
"This will help facilitate the deployment of broadband technologies which are capable of delivering speeds in excess of 20Mbps,"said Patterson.
To address capacity constraints in the cabinets the commission has developed space allocation rules.
- NZPA
