Richard Inder: Network debate won't go away

Telecom's $390 million payout to investors should set a floor under its share price for some time.

But it will add fuel to the debate over the state of the nation's infrastructure.

Telecom is a utility that should not be offering returns well above market interest rates.

But even before the announcement, the shares were offering a dividend yield well in excess of its international peers. After the payout, it will offer a gross yield of more than 9 per cent.

Returns at least in the short term will be locked in because it retains control over the copper wires that connect homes and businesses to the wider network, and the prospect of harsher regulation is remote.

Meanwhile, New Zealand ranks at the bottom of developed countries for high-speed internet uptake. Our standing in the international telecommunications investment league tables is woeful.

To be fair, Telecom is upping its investment from $703 million this year to at least $750 million in the coming year and as much a $775 million if it succeeds in winning accounts with large companies.

Furthermore, it competes for capital in the international market and, relative to its peers, its shareholder returns have been middle of the road. New Zealand shares will also yield more than those overseas because interest rates here are much higher. And the prospect of new technology usurping that monopoly remains.

But those arguments have long been held out in support of not regulating and New Zealand consumers have paid dearly as a result.

UNANSWERED QUESTIONS

Metlifecare's half-year earnings pose more questions about the retirement homes operator than they answer.

The company has the unusual habit of stating the bald numbers and, then a couple of weeks later, meeting analysts and investors to discuss the result. This year was no exception.

Noting a rise in net surplus from $8.2 million to $8.8 million, it said: "The result reflects strong margin growth and resales that are expected to continue through the second half of the year.

"The board remains confident that Metlifecare is on track to deliver a full-year net surplus of $21.5 million." And, that was about it.

Chairman Peter Fitzsimmons was unusually candid in his explanation for the company's unique take on keeping the market informed.

"We do not really have a good reason," he said, before adding that management discussion of the figures was not yet complete.

That is a poor excuse.

If telecoms giant Vodafone, with operations in 27 countries across five continents, is able to produce a fulsome discussion of its earnings at the same time as it releases its results, so should a small New Zealand-based retirement homes operator. But setting that aside. This time the case for disclosure was stronger.

It is now almost a year since founder Cliff Cook put his cornerstone stake on the market and, until recently, the deal looked done. Cook had struck a deal at $3.72 a share with an unnamed buyer.

In accordance with a 1999 shareholder agreement, he had first to offer the shares to Todd Capital, which holds 35 per cent.

Todd later did not accept the offer and, under the terms of the pact, was required to sell its shares. But nothing happened and the deal remains up in the air. Meanwhile, the company remains without a chief executive and its future remains uncertain.

This is unsettling for minority shareholders.

Fitzsimmons says the matter is out of his hands. But again this is a poor response. At the very least, he should press Todd and Cook to update the other owners on progress of their talks.