7 May 2010

Telecom shares hit record low

8:26 pm on 7 May 2010

Telecom shares sank to an all-time low of $2.08 cents on Friday after the company reported a 32% fall in its third-quarter profit and trimmed its dividend ratio for 2011.

The stock recovered to close down 2 cents to $2.13, while the wider market was also dragged lower by turmoil on Wall Street.

Telecom made $97 million in the quarter, while revenues fell 10% to $1.3 billion and below market expectations.

However, the company also cut its dividend ratio from 110% of profit to 90% for the next financial year - a move Forsyth Barr analyst Guy Hallwright believes may have spooked investors.

An independent report into the failure of Telecom's XT network, built by the US-based Alcatel Lucent, found it was not ready to cope with the huge volumes of mobile traffic.