Telecom hangs up on dividend reinvestment scheme

Wednesday 17th November 2010 1 Comment

Telecom is to cancel its dividend reinvestment scheme for the first quarter dividend because of share price uncertainty created by the delayed announcement of preferred partners for the government's ultra-fast broadband project.

The reinvestment scheme triggers an on-market share buyback by Telecom to maintain issued capital at stable levels.

The potential for the imminently expected UFB announcement to move the share price has prompted the cautious approach, a Telecom spokesman said.

While uptake for the scheme ran at only 6% in the last quarter, "Telecom considers it is not prudent to proceed," citing "best practice corporate governance."

The 3.5 cents per share fully imputed first quarter dividend is payable on December 3, and was announced on November 5, at a time when Telecom had "had anticipated an imminent announcement in relation to the UFB initiative, in accordance with Crown Fibre Holdings (CFH) expected timetable."

That timetable has now over-run, although BusinessDesk inquiries indicate that decisions on preferred providers are still likely within the 10 to 14 days, with Telecom firmly in the tent for inclusion in the $1.35 billion government-sponsored project.

The first three preferred providers, announced in October, were all regional electricity networks and members of a rival bidding consortium, the Regional Fibre Group.

Telecom said it is not aware of the current timing for the next CFH announcement or the likely outcome of the UFB process.

"Shareholders who have elected to participate in the dividend reinvestment plan will receive a cash dividend at the same time as dividends are paid to shareholders who do not participate in the dividend reinvestment plan, ensuring that all shareholders are treated equitably," the national telco said in a statement to the NZX.

Businesswire.co.nz

Comments from our readers

On 17 November 2010 at 5:29 pm Beejaym said:

After losing more than $35,000 because of the Labour Government's destruction of TELECOM, I hope that the National Government will make a rational decision and ensure that our assets are used properly in the UFB scheme.