Bad news? What bad news? Telecom shares shoot up
On the face of it, this morning's surprise announcement that the Commerce Commission will now be able to regulate Crown fibre companies is a negative for Telecom - which is in the running for 25 Crown fibre regions, including all the major cities.
But investors seemed unfazed by today's development.
In mid-afternoon trading, the company's shares (NZX: TEL) were up 3% to $2.40, continuing their recent bull run. The broader market was up 0.11%.
News of the removal of the Telecomunications Amendment Bill's 10-year "regulatory holiday" clause drew praise from Tuanz, InternetNZ, TelstraClear, the Greens and others this morning - all of whom had worried it handed competitive advantage to likely Crown fibre winner Telecom.
Labour was seething however, with communications spokeswoman Clare Curran seeing loopholes in the new regulation that favour a winner, potentially "insulating" Telecom from Commerce Commission-manded price drops - whose cost will now be picked up by the government.
Voting with their wallets, Telecom investors seem to agree with Ms Curran's assessment.
Reynolds: comfortable
Telecom chief executive Paul Reynolds said his company was "comfortable in principle with the proposed changes. They appear to adopt a standard contractual approach to Public Private Partnership (PPP) arrangements.
Dr Reynolds added, “They should therefore provide investors with the necessary degree of certainty while also ensuring the industry is comfortable with the level of regulatory oversight.”
As well as regulatory changes included in the Telecommunications Amendment Bill, Telecom needs shareholder and debt-holder approval before it can split into separately-listed retail and network companies - a precondition for winning Crown fibre business.
BELOW Telecom's bull run over the past month, excluding today's spike (chart courtesy NZX.com):
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Comments and questions5
This is not just about a leg-up for Telecom, it is about whoever is chosen in each area to get the contract. Remember, Northpower has already got the contract and laid fibre in Northland. If it had a transparent share price (it doesn't, as it is wholly-owned by the Northpower electric power trust), it would be interesting to see what has happened to it!
Today's 'spike' is less significant on a ten-day horizon than the equivalent 'spike' last Friday (smoothed to 15 minute frequencies). Moreover, it is made to appear steeper by a sharp drop in the price yesterday - possibly because someone with inside knowledge knew an announcement was coming but not what it would actually contain????
A statistician looking at the longer-term graph would be hard-pressed to detect any significant deviation from the long term trend. The headline should not read "Telecom shares shoot up" but 'Regulatory holiday goes - Telecom shareholders unfazed'
The industry gossip from Monday was that the outcome of CFH tenders would be announced Wednesday, which fits with the share price rise from last Friday, if there was insider knowledge.
Insider Trading in NZX oh come on that would never happen.
Strong rules in place hang mans noose, beating with a rattan.
Oh thats right in the wild west of NZX nothing, no investigation but if you do upset the old boys maybe you'll get a little fine and name suppression.
this is not just about a leg-up for Telecom, it is about whoever is chosen in Orkut Scraps each area to get the contract. Remember,
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