8 May 2010

New low for telecom shares

6:01 am on 8 May 2010

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

The stock later recovered to close down 2 cents at $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, which was below market expectations.

But the company also cut its dividend ratio from 110% of profit, to 90% for next financial year, which Forsyth Barr analyst Guy Hallwright says may have spooked investors.

And an independent report into the failure of Telecom's XT network, built by Alcatel Lucent, found it was not ready to cope with the volumes of mobile traffic experienced.