27 Sep 2011

Telecom roadshow moves to Auckland

7:13 am on 27 September 2011

Telecom is to hold a shareholders meeting in Auckland on Tuesday evening as part of a nationwide roadshow aimed at convincing investors that its plans to split the company in two are the right move.

The company wants to split off Chorus, its network arm, into a separately listed company, so it can take part in the Government's ultra-fast broadband initiative based on fibre-optic cable.

The proposal needs shareholder approval and will be put to a vote in October.

The first meeting was held in Dunedin on Monday when around 100 shareholders turned up to hear about the plan.

Chief executive Paul Reynolds told the meeting that fibre-optic would be the future for the telecommunications industry and the government's $900 million investment in the project helps to reduce the risk.

He argued that it was important for Telecom to be aligned with Government objectives in order to deliver value for shareholders and the proposed split did exactly that.

Shareholders spoken to by Radio New Zealand on Monday say they will support the deal. One investor, Barry Simpson, believes Telecom has made the right decision.

"There is a choice, but I don't think staying where we currently are is a viable choice. I would suggest that from the address we've had today that most people would be in favour of accepting the split."

Mr Simpson says Telecom might not improve from the merger, but it will stop the company's situation getting worse.

And, in the words of another investor: "Shareholders have been rather disappointed with Telecom over the years and this might breathe a bit of life into it."

Other meetings will be held in Tauranga and Hamilton on Thursday and Wellington and Hawke's Bay on Friday.

The meeting are the first chance investors have had to quiz the company about the plan since they were sent a 500-page book explaining the details.

Shares in Telecom fell 14 cents, or more than 5%, to close at $2.50 on Monday.