Telecom US shareholder seeks new directors

By Jane Shanahan

Monday 11th August 2008

Elliott International, a US private investment firm which owns 3% of Telecom, nominated two directors to overhaul strategy and potentially break up the company.

�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 Telecom has an �unclear and outdated strategy� and shareholders remain dissatisfied with the company�s progress, he said.

The US firm said Telecom should consider a structural split of its business units, a step further along its current path of operational separation. Elliott first made the proposal last year in a submission to the government on its plans to lift competition and service quality in telecommunications.

The candidates, Infratil director Mark Tume and Mark Cross, a former senior executive at Deutsche Bank, would bring �strong commercial and strategic acumen� to the board, Elliott said. The pair will stand for election at the company�s annual meeting on October 2.

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 was unchanged today at NZ$3.40.

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.

(BusinessWire.co.nz)

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