Long Term View: Telecom NZ Ltd

In this series of posts I am going to be looking at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO.

The calculation of returns includes dividends and tax credits.

Lets have a look at Telecom New Zealand Ltd [TEL.NZ] this time. I have skipped to the end of the alphabet here because Telecom is in the news and it is bad news, again. When I started this series I was convinced that this company would be one of those that would show better returns than most would think given that its share price is currently around its 1992 IPO level. Lets see.

With NZ$5.95c in net dividends paid (see chart above & 1997, 1999, 2009 TEL Annual Reports ) (the reason why I thought the returns would be better than simply looking at the share price and ironically the reason why the company is struggling and getting so much bad publicity - too much paid in dividends and not enough investment back into the company) and another 33% of that figure gained for those eligible for associated tax credits, makes just over a 450% return (see chart below for share price percentage gain against the average of all NZX indexes) over the 18 year listing which gives an annual net return of around 25 %.

This is approximately 35% better than the return from the average of all NZX indexes.





Long Term View Series

Auckland International Airport
Air New Zealand
AMP Ltd
Briscoe Group Ltd
Contact Energy Ltd
Delegats Group Ltd
EBOS Group Ltd
Fletcher Building Ltd
Fisher & Paykel Appliances
Fisher & Paykel Healthcare
Freightways Ltd
Goodman Fielder Ltd
Hellaby Holdings Ltd
Mainfreight Ltd
Metlifecare Ltd
New Zealand Refining Ltd
Port Of Tauranga Ltd
Pumpkin Patch Ltd
Restaurant Brands Ltd
Ryman Healthcare Ltd
Sanford Ltd
Sky City Entertainment Group Ltd
Sky Network Television Ltd
Telecom NZ Ltd
Telstra Corp Ltd
The Warehouse Group Ltd


Telecom NZ @ Share Investor

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c Share Investor 2010

ODT does the Business

Heads up for the Otago Daily Times business section. I have been too lazy in the past to make my way over there, focused instead on NZ Herald Business and Stuff Business pages and Googling.

I have heard that it is a good business read. Guess what, it is.

More stories, better analysis and less uneducated opinion in their business news stories.

With the possible exception of the National Business Review (a mainly subscription offering), the ODT should be the destination for your daily business news fix for New Zealand business news and commentary if you want to keep in front of your competition.

I am making it mine from now on.


Related links

ODT Business

Recent Share Investor Reading

• Long Term View: Telecom NZ Ltd
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c Share Investor 2010

NZX needs competition

Monopolies are only good for one party, the monopoly itself.

The NZX , the arbiter of The New Zealand Stock Exchange [NZX.NZ], is one of those parties and boy what a party the NZX , its broker shareholders and institutional investors have been having for many years.

The party has been good for the NZX and its members and mates but the hangover remains for mum and dad investors and the regulation of NZX listed companies as a whole.

The NZX , its shareholder members who are brokers and those close to them, have always been favoured over mum and dad on the street. Price sensitive information flows to the favoured come first and fast and breaking of rules by broker members/shareholders have always been hand slaps rather than anything concrete that would forbid any further breaches of their own NZX rules.

This has two effects. Enriching brokers at the expense of mum and dad shareholders and leaving those same mum and dad investors dubious about investing in the stockmarket in the first place.

The New Zealand Stockmarket has suffered this malaise for many years and it shows especially in its poor performance on the whole since the stockmarket crash of the late 1980s.

Investors would rather buy housing than invest in something that they trust. They simply don't trust the stockmarket and the NZX its mates and their shenanigans are the reason for this.

Why would you spend good money on something you cant trust because some parties have advantages over others?

The irony here as well, is that the NZX is supposed to be an unbiased stockmarket regulator that doesnt favour anyone, not the least of which would be its own listed company NZX , which is itself listed on its own stock exchange.

The antidote to this stockmarket sickness and bias?

Either have a completely independent stockmarket regulator or allow competition in this area.

We know that competition helps provide better service, cheaper prices and a more level playing field for consumers and the same would be true of the stockmarket sector.

I have been arguing for ten years now that surely in this Internet age investors who want to buy and sell shares could be matched together more efficiently and with more expicit fairness other than other dealing with a monopoly like the NZX.

Much like peer to peer downloading, intermediaries could easily be set up to get together willing buyers and sellers with oversight by a third independent party. Even buying shares directly from the company you want to be invested in would be more appropriate. Why have a third party clipping the ticket (your stockbroker) when investing directly you could remove that cost.

Stockmarket investors in New Zealand deserve to have a fairer, more independent way of investing in NZX listed companies. The current system is simply not working in an appropriate and explicit way.

Until then expect continued mediocre performance from the stockmarket.


Recent Share Investor Reading

• Michael Hill International: 2010 half year profit commentary
  
• McDonalds: Im Lovin It!
• Long Term View: Air New Zealand Ltd
• Sky City Entertainment: CEO Nigel Morrison discuss 2010 half year
  
• Sky City Entertainment Group 2010 Interim Profit Review
• Freightways Ltd: 2010 Half Year profit commentary
• Long Term View: Auckland International Airport Ltd

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c Share Investor 2010