Verizon not commenting on talk it wants to sell Telecom stake

By NZPA

Wednesday 18th September 2002

American telecommunications company Verizon won't comment on speculation it has been hawking its 21.5 percent stake in Telecom around Australasian institutions.

The Australian Financial Review this week reported that a number of Australian institutions had been confidentially approached.

"The only comment we would make is that we don't comment on rumours and speculation in such matters," Verizon media relations manager Steve Marcus told NZPA today.

Local institutions said Verizon had yet to come knocking on their doors for a share in the $2 billion stake.

Institutional investors AMP, Tower, ING and ACC all said they had not been approached by parties acting on behalf of Verizon to sell its 400 million Telecom shares.

They said they would expect to be approached if Verizon was selling. Verizon had signalled it was a seller some time ago, but the question was, when, and at what price.

AMP has about 2.4 percent of Telecom and the others about 1 percent each of Telecom.

They would be interested in more shares in Telecom "at the right price".

The sale rumour centres around two investment houses, thought to be Salomon Smith Barney and Credit Suisse First Boston, marketing the Verizon shares.

Analysts said New Zealand investors, institutions and "mums and dads", did not have the capacity to buy the stake. The bulk of the shares were more likely to be sold overseas.

The latest round of rumours from Australia appeared to be prompted by a report Verizon was keen to reduce debt in the next 12 months.

AMP Henderson senior equity analyst Nat Vallabh said there had been no approach to date to buy the Verizon shares.

The Telecom share price had dropped in the past couple of days because of the rumours, he said.

The price has fallen from last Thursday's closing price of $4.98 to $4.86, down five cents today.

Mr Vallabh said local investors would be natural buyers of some of the shares.

Tower's New Zealand portfolio manager Wayne Stechman said he knew of no substance to the rumours.

"We haven't had any approaches," Mr Stechman said.

"If it were to be happening it's a huge deal, so a couple of big overseas cornerstones (shareholders) would probably be approached first. The local market is probably relatively marginal buyers," Mr Stechman said.

Verizon had clearly flagged it wanted to eventually sell its stake in Telecom, he said.

Verizon, previously Bell Atlantic Corp, sold $US2.5 billion ($NZ5.39 billion) of five year convertible bonds in 1998 using its then 25 percent stake in Telecom as security.

The slide in Telecom shares during the last two years meant investors were highly unlikely to convert the bonds which mature in April 2003.

Verizon would be keen to sell the stake rather than further stretch its balance sheet by raising new debt

In March Verizon, which has trimmed its stake to 21.5 percent, said it favoured gradually selling its holding below 20 percent.

Telecom chief executive Theresa Gattung said on Friday she was unaware of Verizon wanting to change its position. She added that Verizon did not talk to Telecom about its intentions for the stake. She said the prospect of Verizon selling had been overhanging Telecom's share price for some time.

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