Showing posts with label Chorus. Show all posts
Showing posts with label Chorus. Show all posts

Monday, May 30, 2011

Telecom New Zealand Ltd: Chorus or Bust

Telecom New Zealand Ltd [TEL.NZX] has been in the news for the past week because the government has announced that they are going to be the company that will roll out the majority of the taxpayer subsidised Fast Fibre Network (FFN) that will apparently provide far greater speeds for our internet services than we currently have.

This means that Telecom NZ must split into two separate companies in order to satisfy the rules and regulations that government have set down for the implementation of the FFN.

This will mean that Chorus, the part of Telecom whose business it is to build and maintain telecommunications infrastructure for themselves and other players and its retail arm, Telecom Retail - the part of the company that most customers of Telecom deal directly with and where they buy their mobile, internet or fixed line products - must be split into two completely separate companies. This means separate listings on the stockmarket for both companies and a duplication of a whole host of management from the floor sweeper middle manager right up to the CEO.

Of course this means cost to separate and will be bourne by TEL shareholders in the first instance and customers through higher prices as a secondary affect of this.

Investors will of course be wondering to themselves, well which company of the two should I invest in and if I am already a TEL shareholder which stock should I ditch, if any?

In my humble and not so humble opinion I would put my money of the Chorus part of the business. It is the part of Telecom that has a huge monopoly through the domination of their telecommunications infrastructure - copper and fibre cable criss-crossing the country - and as I really love monopolies this part of the companies business will do well, especially as they appear to have a unregulated first 10 years where they can set prices and the only arbiter of consumer fairness will be the usually intemperate Commerce Commission.

While Telecom's retail division has a few million customers that the new Chorus will probably look after, competition in the telecoms retail area should eventually keep all important margins down from present levels and that will impact on the profitability of the new separate retail division of Telecom.

The split coming at the end of 2011 will mean investors in Telecom will receive stakes in the two new separate Telecom entities and will probably do well if they bought the companies shares at the right price.

It might be wise though for them to consider selling shares in the retail company and stock up on Chorus shares.

My pick is that Telecom will take this opportunity to ditch the Telecom name altogether, a name wrapped up in so much negative history that their retail business would do better to leave that all behind.

Judging by their recent logo shoosh-up it is bound to be something silly.

I'm picking Burst!


Telecom Split Details

Telecom Split

Telecom NZ @ Share Investor


Share Price Alert: Telecom New Zealand Ltd 4
Share Price Alert: Telecom New Zealand Ltd 3
Share Price Alert: Telecom New Zealand Ltd 2
Share Price Alert: Telecom New Zealand Ltd
Telecom New Zealand 2011 first half profit review
Telecom New Zealand 2011 first quarter profit review
Telecom Chart: Lazarus Recovery on lower volume
Telecom maybe oversold
Telecom NZ Share Price has "Jumped the Shark"
I was Wrong... sort of
Telecom NZ: TV3 60 Minutes Segment more like Corporate PR
Telecom Share Price Limbos but has it jumped the Shark?
Telecom NZ: Saint Gattung gets her Ya Ya's out
Telecom NZ: Bye Bye Paul Reynolds
Long Term View: Telecom NZ Ltd
Stock of the Week: Telecom Ltd
Revisiting Telecom

Getting cute and fluffy with Teresa Gattung
Telecom NZ Hangs up
Business Gobbledygook puts up barriers to communication
A Rare Breed
Telecom NZ facing a watershed period
Biology a major key in "glass ceiling" for women
Telecom rewards Gattung for mediocrity

Download TEL Company Reports
Discuss TEL at Share Investor Forum - Register free


From Fishpond.co.nz

Bird on a Wire: The Inside Story from a Straight Talking CEO

Buy Bird on a Wire: The Inside Story from a Straight Talking CEO & more @ Fishpond.co.nz

Fishpond


c Share Investor 2011

Thursday, August 5, 2010

Telecom Chart: Lazarus Recovery on lower volume



Since I have been closely following the Telecom NZ [TEL.NZ] share price I have wondered how low the share price was going to go and if indeed lows of $1.81 reached just a month ago meant that the stock was oversold.

Well, since then the share price has put on 12% on about half the volume (see 23 month TEL chart above) of the June share price plunge and is currently trading at $2.02. Short termers will be pleased with their current gains and have seen a new trading pattern emerge where opportunities exist for gains of more than 10c. Hard to say what might happen next short term but investors with a 12% gain might consider realising some cash.

Of interest too will be medium term investors who are trying to factor in what the company could be worth if they win a government contract to set up the new fibre network around the country and will be subsequently demerger Telecom into two separate business units, Chorus, their Network company and Telecom Retail, their public face and presence.

The value of the two units will be difficult to assess given no profit or revenue projections for a Chorus with the responsibility to build, run and sell business off the new network but Telecom see profit to be made so medium term the company could be worth a punt.

Long-term my view is avoid unless you have faith in current or future management that they can turn this ship around.

By on weakness for short or medium term returns.


Telecom NZ @ Share Investor

Telecom maybe oversold
Telecom NZ Share Price has "Jumped the Shark"
I was Wrong... sort of
Telecom NZ: TV3 60 Minutes Segment more like Corporate PR
Telecom Share Price Limbos but has it jumped the Shark?
Telecom NZ: Saint Gattung gets her Ya Ya's out
Telecom NZ: Bye Bye Paul Reynolds
Long Term View: Telecom NZ Ltd
Stock of the Week: Telecom Ltd
Revisiting Telecom

Getting cute and fluffy with Teresa Gattung
Telecom NZ Hangs up
Business Gobbledygook puts up barriers to communication
A Rare Breed
Telecom NZ facing a watershed period
Biology a major key in "glass ceiling" for women
Telecom rewards Gattung for mediocrity

Download every available TEL Annual Report Free


Discuss TEL at Share Investor Forum - Register free


From Fishpond.co.nz

Bird on a Wire: The Inside Story from a Straight Talking CEO

Buy Bird on a Wire: The Inside Story from a Straight Talking CEO & more @ Fishpond.co.nz

Fishpond


c Share Investor 2010