Telecom surges after broadband decision

Tuesday 24th May 2011

Shares in Telecom surged after an announcement that the company's network arm Chorus would build nearly 70% of the Government's ultra fast broadband initiative.

As part of the deal, Telecom must split off Chorus into a completely separate company. Telecom is aiming to do that by the end of the calendar year, and has withdrawn financial guidance for the 2012 financial year.

Soon after the sharemarket opened today Telecom shares were up 14c to $2.42, the highest level in 16 months.

That helped lift the benchmark NZX-50 index 8.15 points to 3562.29 around 10.15am, despite big falls on Wall Street. Yesterday the index lost 23.3 points after hitting its highest level in nearly three years above 3578 points on Friday.

Telecom (NZX: TEL ) was one of few companies to make early gains. Among other key stocks Fletcher Building (NZX: FBU ) fell 6c to $9.07 early and Contact Energy (NZX: CEN ) dropped 4c to $5.92.

Cavalier Corp (NZX: CAV ) lost 5c to $3.78, Steel & Tube (NZX: STU ) dropped 4c to $2.65, Auckland Airport (NZX: AIA ) lost 2.5c to $2.30, NZX (NZX: NZX ) dropped 2c to $2.50, Tower (NZX: TWR ) was down 2c to $1.81, and Vector (NZX: VCT ) lost 2c to $2.41.

In the US, stocks closed at their lowest levels in a month in a sign of increasing doubt that equity markets can weather recent weakness in global manufacturing and demand.

Industrial, energy and technology stocks, closely related to growth, were among the day's top decliners. Poor manufacturing figures from Germany and China were a surprise and gave investors reason to shed positions in those industries.

The Dow Jones industrial average dropped 1.1% to 12,381.26, the Standard & Poor's 500 lost 1.2% to 1317.37, and the Nasdaq Composite fell 1.6% to 2758.90.

NZPA

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