Telecom breaks $2 for first time - analyst still won’t say ‘buy’

Telecom's shares (NZX: TEL) have hit a new all-time low today of $1.98. The company opened the Friday session at $2.05; it closed at $1.99.With the telco so off its 52-week high ($2.88), is it time to back up the truck?Not for First NZ Capital's Greg Main.

Telecom’s shares (NZX: TEL) have hit a new all-time low today of $1.98. The company opened the Friday session at $2.05; it closed at $1.99.

With the telco so off its 52-week high ($2.88), is it time to back up the truck?

Not for First NZ Capital’s Greg Main.

“At $2 it is still on a higher price-to-earnings ratio and lower dividend yield than Telstra - and for which one do you perceive there to be more certainty of outcome and lower risk?,” the analyst asked NBR this afternoon.

Factoring the worst-case Crown fibre scenario, Forsyth Barr has essayed a series of scenarios that could see Telecom falling as low as $1.75 - although he thinks the worst-case scenario is unlikely.

Both analysts have a hold rating on Telecom.

Today's 3% fall comes on the heels of the Commonwealth Bank of Australia's May 19 disclosure that it was selling down its Telecom stake.

The broader market has fallen 2.3% today following a similar plunge on Wall Street.

The company traded at above $4 at the start of chief executive Paul Reynolds’ reign in 2007, on the eve of operational separation, and above $9.50 when Theresa Gattung began her tenure in 1999.

Reynolds hit in the pocket
Long-suffering Telecom shareholders can perhaps take a little schadenfreude at the fact Telecom chief executive Paul Reynolds will feel the pain more keenly than many investors.

Part of Dr Reynolds' 2009 remuneration package (of $5 million to $7 million, depending on what angle you squint at the spreadsheet) was a performance incentive rights bonus (on top of the regular bonus described below) that consisted of "668,790 share rights issued with a value at the time of issue of $2.1 million".

The shares vest over a three-year period.

At Telecom's Friday closing price of $1.99, the 668,790 parcel would be worth $1.3 million if sold today.