Telecom may only return $500m to shareholders

By NZPA

Tuesday 10th April 2007

Telecom may give shareholders as little as $500 million of the $2.24 billion from the sale of Yellow Pages because it needs the money to expand in Australia and build faster networks.

Chief financial officer Marko Bogoievski has said the company may make a "substantial" capital return after agreeing to sell its phone-listings unit to a group led by buyout firm CCMP Capital Asia.

But Paul Richardson of BT Funds Management says the company may return as little as $500 million to investors, Bloomberg reported. A survey of 10 analysts produced a median estimate of $1.1 billion.

Telecom has returned $294 million to investors in special dividends in the past two years, in addition to its regular quarterly payments.

Six analysts expect Telecom will opt for a buyback to return some of the funds from the Yellow Pages sale.

However, Sameer Chopra, an analyst at Deutsche Bank AG, said such a dividend was unlikely because of the company's limited tax credits, lower tax payments and large number of overseas investors.

Telecom plans to announce details of its capital management strategy with its third-quarter earnings next month.

Earlier this month the Government outlined a proposal for a three-way split of Telecom into an access network services unit, a wholesale unit and a retail unit. It hopes the policy will make broadband cheaper and faster.

Public comment is expected by April 27.

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