Forum Archive Index - May 2002

["winner69 ." <wwinner69@hotmail.com>]

That short selling stuff alluded to in the Independent was hinted at by 
Patrick the other day in his post
http://www.sharechat.co.nz/archives/current/msg00156.shtml

Whether that was his intent or not I don't know. But I think he was getting 
stuck into me as one of those nameless 'analysts' who is baffled because I 
said that the TEL result was uninspiring.

Never mind. But it is interesting what some analysts (those who deem 
themselves to be professionals who probably have not been doing any short 
selling) in Australia are saying about TEL.

>From recent broker reports here are 2 excerpts ....

"NZ operation showed some resilience but Australia continues to struggle to 
deliver revenue growth. However there are signs that Australia costs are 
coming under control. The domestic outlook remains muted and we wonder how 
much scope there is for further cost reduction. Australia is a competitive 
battlefield and we struggle to see how TEL will outmanoeuvre TLS and SGT. 
The AAPT acquisition has caused earnings weakness and we have doubts, given 
market conditions, about management's ability to drive and sustain 
Australian EBITDA expansion. Excessive debt levels remain a problem and we 
are not convinced by it's Huthchison 3G alliance strategy. Telecom presents 
too many downside risks - SELL"

and a more positive one....

"Even though Telecom has addressed the lack of integration between its 
business units such as Connect and AAPT by bringing them under a common 
reporting structure we believe that cost rationalisation and revenue 
enhancement benefits may not be evident for several quarters. We believe 
that TEL's outperformance compared to global peers appears overdone and we 
retain our HOLD rating"


As Telecom evolves from a yield company to a growth one (their words) 
everybody seems to agree that that growth has to come from Australia. We see 
the solid performance in NZ but can we grasp the progress in Australia? I 
feel we need to hear how Australians see Telecom performance and it ain't 
all positive.

In saying that at least Telecom is making profits that are not far off 
covering it's cost of capital. Unlike some corps it is not destroying value 
but it hardly deserves to be put on a pedastal as a great performer and earn 
lofty valuations as a result.












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