Telecom best of bad bunch - survey

By NZPA

Thursday 4th July 2002

Telecom has been labelled the best performer in a weak telecommunications sector over the last 12 months by international consulting firm IR Group.

Telecom gave a total return of -8.7 percent in the year ending June 30, according to figures released today by London-based investor relations consultants IR Group .

Total return is a combination stock price movement from the beginning to the end of a period and the pre-tax value of dividends paid.

Although lacklustre compared with the stock's performance during the 1990s, Telecom's return beat global heavyweights British Telecom, Vodafone, AT&T and WorldCom hands down.

BT posted a total return of -24.8 percent during the period; Vodafone, -42.2 percent; and AT&T, -36.7 percent.

WorldCom, which last week became the latest Wall Street company to reveal dodgy accounting practices, was the worst performer in the survey with a total return of -94.2 percent.

Telecom's closest rival was Australian telco Telstra Corp which returned -9.65 percent over the year, followed by Hutchison Telecommunications (Australia) on -15.48 percent.

Shares in Telecom closed today down 7 cents at $5.01 against a year high of $5.59 and a low of $4.74.

IR Group said telco valuations had fallen drastically over the past two years as stock markets have taken account of factors like the limited growth opportunities in traditional markets, heavy capital expenditure on upgrading networks and new technologies, and high prices paid for radio spectrum for 3G wireless services.

These issues were seen as having the most impact on American, British and European telcos, while Australian and New Zealand telecommunications companies were seen to be in a "relatively sound" position.

The share price component of total return remained highly volatile in all telcos over the 12 month period, IG Group said. For Telecom there was a -12.3 percent movement in share price from the beginning to the end of the year, yet only -1.2 percent of this was over the second half of the period.

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