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Telecom shareholder Elliott warns against share funding for 3G

Friday 17th October 2008

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Telecom's feisty 3% shareholder Elliott International says the phone company would erode its value by issuing new shares.

The New York-based hedge fund has renewed its criticism of New Zealand's largest publicly traded company after failing to win support to appoint new directors to the board and pursue a strategy of breaking up the business.

"Does the board seriously believe that issuing more stock with the stock price at an all-time low is beneficial to shareholders," the fund said in a statement.

This week, Telecom said profit will fall in 2009 because of NZ$574 million of spending on its high-speed mobile network. The Elliott's statement questions the viability of its funding plans for the project. Telecom has said it will help fund the network via a dividend reinvestment plan.

Shares of Telecom rose 4.5% from a record low to NZ$2.33 and have fallen 50% in the past 12 months.

By Jonathan Underhill

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