Forum Archive Index - April 2002

["Viewpoint ." <viewpoint_@hotmail.com>]

Interesting discussion that snoopy and donkeyboy are having on the relative 
merits of Telecom performance.

A lot of that discussion has been around AAPT.

A recent Herald report says that,quoting from a Merril Lynch report, AAPT is 
valued in Telecoms books in excess of $2 billion and generates negative cash 
flow of $200 million a year. Not very inspiring.

That appears to be the basis of the suggestions that Telecom will write down 
the value of this investment before June.

The current debt to capital figure at Telecom is already over the top.

December balance sheet, in rough numbers, shows equity of $2 billion and 
debt of $6 billion which puts the debt to capital ratio at 75%.

Writing down the AAPT investment say by $1 billion would reduce equity to $1 
billion and with debt remaining the same the debt to capital soars to 86%.

Doesn't that suggest that Telecom has to raise heaps more capital very soon?

Not a very bright picture  - private capital raising diluting existing 
investors stake, rights issue seeking more money from already disenchanted 
shareholders, or even worse, snoopy, they might have to cut that dividend 
that regularly comes into your letterbox.

Am I missing something big time? Cos nobody else seems concerned about the 
state of Telecom's balance sheet.



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