The sharemarket reacted positively to news yesterday that Telecom faces a three-way operational and accounting split.
Telecom shares closed 4c higher at $4.52, despite the recommendation from Parliament's finance and expenditure select committee of what amounts to a tougher regulatory regime for the country's largest listed company.
"Telecom's
already got a lot of uncertainty factored into its share price and what's been released appears to be reasonably close to what most people were expecting at this stage," said Forsyth Barr analyst Jeremy Simpson.
While the separation was more complex than Telecom said was necessary, it was in line with information leaked to the Business Herald this month. It was also less harsh than the structural separation hoped for by Telecom's rivals.
"It's a definite sign from the market that maybe Telecom's dodged a bullet on this one," said Hamilton, Hindin, Greene broker James Smalley.
"From the moment it came out Telecom's shares have gone up."
Telecom stock had again been in retreat since hitting a two-month high on November 7 when it was reported the select committee was considering tougher legislation than the original proposal from the Government in May that wiped billions from Telecom's market value.
Smalley said the stock had experienced a reversal of the old market truism of "buy the rumour, sell the fact".
"With Telecom you could actually say it was sell the rumour buy the fact because the bad news had been pretty much reflected in the price drop over the last few months.
"Telecom gets to keep 100 per cent control over all its divisions [even if] there is accounting separation."
TOUGH YEAR
Truth serum: In March, Telecom chief executive Theresa Gattung confirmed what many consumers already knew, telling analysts that incumbents such as her company used consumer confusion as a marketing tool.
Leaks: In May, Government plans to force Telecom to open its network to competitors were leaked to Telecom within hours of being signed off by a top-level Cabinet committee. The leak forced the Government into an early announcement of plans that were intended as a Budget centrepiece.
Changes at the top: Rod Deane announced he would step down as chairman of the company he joined as chief executive in late 1992. Auckland Airport chairman and current Telecom board member Wayne Boyd took over the reins in July.
Aussie woes: Telecom cuts struggling Australian business AAPT's value by $1.165 billion, taking its worth to just $270 million, as it battled falling retail prices and rising wholesale charges.
* Additional reporting by Helen Twose
