ASX talk boosts Telecom

By DANIEL RIORDAN

Telecom's share price sparked into life yesterday because of expectations it will be included in Australian market indices from today.

The move would boost the dual-listed company's value by an automatic $500 million and lift its profile on global investors' radar screens.

Inclusion would also be seen as a further sign that the Australian Stock Exchange, recently thwarted in its takeover bid for the New Zealand Stock Exchange, may be prepared to take a less frontal route to add New Zealand companies to its board.

Telecom's lack of liquidity across the Tasman has kept it out of the indices in the past and the market is rife with speculation that its inclusion now could serve as a sweetener to attempts to have it and other big listed companies move their primary listings across the Tasman.

Telecom spokeswoman Linda Sanders said the company believed it had a 50/50 chance of being included in the indices, which are managed on the ASX's behalf by Standard & Poor's and reviewed every three months. Three S&P executives and two ASX executives make up the index committee.

Standard & Poor's index manager Jason Feldmayer said new indices would be released today, covering the top 20, 50, 100, 200 and 300 companies. He would not confirm or deny Telecom's presence in any of the indices.

Telecom's market capitalisation of $10.5 billion would place it in the lower reaches of the top 20 ASX companies.

One broker estimated Australian fund managers, who follow index weightings more than their New Zealand counterparts, would straight away need to buy $500 million of Telecom shares to lift their holdings to the required level.

Telecom's share price rose 32c to $6.04 on that expectation, but if the company does not make the indices, the share price is expected to fall back just as quickly.

Telecom's fillip came amid wider speculation that the ASX might be prepared to relax its index liquidity rules in a "goodwill gesture" to encourage the biggest New Zealand companies to switch their primary listings to Australia.

But ASX spokesman Gervase Greene said it had always been up to New Zealand companies to decide where to hold their primary listings and the ASX was not about to launch a stealth raid across the Tasman.

Most of New Zealand's biggest companies are dual listed and those contacted last night said they had no intention of moving their primary listings to Australia, as Lion Nathan and Nufarm (formerly Fernz) have done. Lion Nathan is also expected to be added to the ASX indices.

Sky TV chief financial officer Paul Smart said the ASX had encouraged the company to switch its primary listing last year, but the lower visibility Sky TV would have on the much bigger Australian market counted against it.

Warehouse managing director Greg Muir said his company had not been approached. The Warehouse is dual-listed and Mr Muir said that was enough of an Australian market presence.

"We're a New Zealand-domiciled company and New Zealand will remain our primary listing."

Telecom's Ms Sanders said Telecom also had no intention of moving its primary listing.

Another top-10 dual-listed company, Fisher & Paykel, also is not interested. Spokesman Richard Blundell said the ASX had this week asked for a meeting with the company but it had declined. He said F&P had its hands full separating into two companies, both of which would be dual listed. But Mr Blundell did not read too much into the ASX request for a meeting, saying ASX representatives were frequent visitors, as were callers from other exchanges. Both the F&P offspring will retain a New Zealand primary listing.

NZSE managing director Bill Foster was overseas and unavailable for comment. NZSE chairman Simon Allen also could not be reached.