Hedge fund presses Telecom

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US hedge fund Elliot International has made a renewed aggressive call for Telecom shareholders to vote its two candidates to the board in the lead-up to the annual general meeting next week.

In a letter to shareholders, the fund said it strongly believed that voting for local candidates Mark Tume and Mark Cross was a “first step” in restoring shareholder value.

"Telecom must make serious changes to improve its performance."

 Elliot, a 3 percent shareholder of Telecom, has launched a new website, www.newdirectionstelecom.co.nz  to provide information about Tume and Cross, and the voting process.

Telecom’s board had seven members, out of a maximum of 12, which was relatively small for a company of strategic importance, said Elliot.

The board desperately needed a more complete skill set, particularly financial expertise, and a more investor-friendly focus.

It needed directors based in New Zealand who could devote more time to Telecom, said Elliot.

The hedge fund made some glaring observations about Telecom’s performance.

-Telecom’s EBITDA had declined at an average rate of 5 percent over the past four years, despite steady revenue growth.

- It had lost almost 15 percent of its retail market share on its own network over the past five years.

-Telecom’s share of the mobile market had declined from about 57 percent to 47.5 percent since 2001.

- Telecom’s financial results had underperformed compared to its Australian peers, Telstra and Optus, over the past four years.

- The company was one of the “lowest valued integrated Telecom companies” in the world.

Telecom’s annual general meeting is on October 2 at the Duxton Hotel in Wellington.

Telecom chairman Wayne Boyd has appointed Saatchi & Saatchi chief executive Kevin Roberts to replace long-serving Telecom director Patsy Reddy, who retires after 10 years on the board.

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