Tuesday 12th August 2008
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Two potential independent directors, Mark Tume and Mark Cross, will put themselves up for election at Telecom's Oct. 2 annual meeting, supported by Elliott. Tume is a director of Infratil Ltd. and Cross is a former Deutsche Bank executive.
"Telecom's performance languishes behind that of other key telecommunications players in the international market," said James Smith, a portfolio manager at the fund, in a statement. Telecom has an "unclear and outdated strategy" and shareholders remain dissatisfied with the company's progress, he said.
Elliott, which owns 3% of the stock, said Telecom should consider a structural split of retail and network, a step further along its current path of operational separation.
Telecom Chairman Wayne Boyd said separating the two units isn't in Telecom's best interests right now. He defended Telecom's track record, saying "we have the management team, strategy and financial expertise
to maximise long-term shareholder value."
Shares of Telecom have shed about 35% in the past five years while the benchmark NZX 50 Index, which the company dominates, has gained 45%. The stock fell 1.2% to NZ$3.36 today.
Telecom's annual earnings fell 16% from a year earlier, the company said last week. Its profit margin in New Zealand "continues to reduce" as customers migrate away from more profitable fixed-line services to mobile, where Telecom competes with Vodafone.
Tume and Cross would bring "strong commercial and strategic acumen" to the board, Elliott said.
Moody's Investors Service today affirmed Telecom's A2 and P-1 ratings while keeping the outlook at 'negative.'
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