Renaissance

2 Comments

    • Telecom Corp. of New Zealand: Q2 Update [view article]
      NZT's move to a WCDMA/UMTS network is significant because up until now they have been hindered by both the limited availability of high-end CDMA/EVDO handsets and limited international roaming opportunities for users of their CDMA/EVDO network.

      With the new network, the latest and greatest 3G+ models will not only work on Telecom's network, but handsets with be interchangeable with those of their competitor. Combined with promised number portability, I believe this will allow them to more easily win back customers from the market leader, Vodafone.

      As for broadband, New Zealand's performance relative to its OECD peers on broadband availability and quality has historically been poor, so I believe (reluctantly, as a stock holder) that regulation to encourage a more competitive market was warranted.

      Its worth noting that this regulation is not particularly harsh on Telecom, with the regulated wholesale price of unbundled bitstream service (UBS) being set reasonably high. In addition, the regulation does not require Telecom to provide UBS service on a line that does not also have PSTN service (ie "Naked DSL"). This means there is ongoing significant revenue to Telecom even when a customer moves to a competing broadband provider via wholesale UBS.

      Telecom have a good management team in place that understands how to compete in the new, regulated environment, and Telecom will continue to pay strong dividends. The only real risk in NZT right now is any potential rebound in the US dollar, which could see NZT decline due to currency changes alone. NZ's high interest rates should continue to support the value of the NZD for the near future, however.

      Disclosure: long NZT
      Feb 27 09:52 PM
    • Telecom Corp. of New Zealand: Q2 Update [view article]
      The chart shown here is incorrect. It has not been adjusted for the 8:5 ADR split which occurred in September '07. The significant dividend payout resulting from the sale of directory services that occurred at that time should also be taken into account. Feb 27 08:34 PM
Contribute an Article Become a Seeking Alpha Contributor