KEY POINTS:
Telecom shareholder Elliott International has raised concerns about the way Telecom intends paying for its new mobile network announced on Wednesday.
"Does the (Telecom) board seriously believe that issuing more stock, with the stock price at an all time low, is beneficial to shareholders?" Elliott, which owns about 3 per cent of Telecom, said in a series of questions sent to the company today.
Telecom is to run a dividend reinvestment plan which it indicated could help fund the network, in which it will be investing $574 million over two years.
It also advised it expected profit to be lower than previously thought due to costs and deregulation related to the project.
Yesterday Telecom shares hit a record low of $2.22.
The stock today is up 9c to $2.32.
Telecom chairman Wayne Boyd said the company believed its decision to move to a W-CDMA mobile network at 850Mhz would provide Telecom with a renewed competitive advantage, improved operational efficiencies and reduced long-run capital spending.
"We believe this strategy, notwithstanding the near-term financial implications, is in the best interest of our shareholders and the long-term strategic and financial performance of the company," said Boyd. responding to Elliott's statement.
Elliott earlier this month unsuccessfully tried to get two candidates elected to Telecom's board.
In today's statement it said it had several questions it believed should be addressed by the Telecom board urgently to give comfort to shareholders.
- NZPA
