KEY POINTS:
US hedge fund Elliott International has today failed to get two independent directors elected to the Telecom board.
Telecom said shareholders voted to re-elect directors Rod McGeoch and Kevin Roberts. The nominees put forward by Elliott, Mark Cross and Mark Tume, were not appointed.
All the votes went to poll, the results of which were announced this afternoon. Kevin Roberts won a 99 per cent endorsement while McGeoch was approved by 96 per cent of those voting.
At the meeting, chairman Wayne Boyd urged shareholders to reject the American investor's nominees.
He acknowledged there were concerns - especially with respect to the share price. But he said Telecom had the right people, strategy and leadership required to deliver.
Elliott owns 3 per cent of Telecom.
Boyd said the annual meeting enabled shareholders to have their say on a range of issues, and welcomed the high level of interest with over 65 per cent of shares voted.
Elliott has argued for a full structural separation of Telecom into a network company, which would be regulated with the rest of the business in a less regulated company.
Boyd said the board recognised the significant time and effort that Elliott had put in to evaluating the potential benefits of structural separation for shareholders, but was pleased to see strong support for Telecom's current operational separation model from shareholders.
Boyd said Telecom had considered structural separation 18 months ago. However, after extensive investigation, operational separation was considered the preferred separation model by the industry and the Government.
"We are now fully committed to operational separation in conjunction with our transformation programme, and believe it will deliver the best return for our shareholders."
Core earnings had declined due to regulation and new competition on traditionally high retail market share and margins.
Boyd said New Zealand's sharemarket had been buffeted in recent months by forces that have affected much larger markets around the world, and this has also influenced the share price.
But he said Telecom remained well financed and in a strong position.
"We reiterate that, subject to any material change in circumstances, we intend to pay shareholders quarterly dividends of 6.0 cents per share, for the next two years, to provide a degree of certainty during this period of transformation.
"We are making good progress with the transformation of our business. We have already started to execute well and I have the utmost confidence that with your support we are well positioned to make the most of every opportunity in front of us."
- NZPA
