Drop hurts more than 40,000 small retail investors

Telecom's New Zealand shareholders have seen the value of their investment plummet by almost $500 million since last week's announcement of tough new telecommunications regulations.

Telecom dominates the New Zealand sharemarket like no other single company does any other market in the developed world. However the majority of its shares are in foreign ownership.

According to its annual report about 25 per cent of its stock is owned locally with institutions holding 17 per cent and the remaining 8 per cent held by more than 40,000 small retail investors.

The company's top-20 shareholders are listed in its annual report but all but two of those are "nominees", that is institutions who hold the stock on behalf of others, which makes the task of identifying the real owners a problem.

Among Telecom's institutional shareholders are funds manager ING New Zealand Ltd, which held close to 100 million shares, equivalent to 5.07 per cent of the company. Other fund managers contacted by the Business Herald were unwilling to disclose their holdings.

Telecom's annual report reveals that the taxpayer holds sizeable chunks of the company through the Accident Compensation Corporation, with 31.7 million shares; and New Zealand Superannuation Fund, with around 11 million shares.

With 40,000 retail investors holding 8 per cent of the stock, the average parcel is 3900 shares.

At the close of business on Wednesday last week, just before the Communications Minister announced the new regulations, Telecom shares were fetching $5.55 each. Last night they closed almost one dollar or 17.65 per cent lower at $4.57.