close
MENU
Hot Topic EARNINGS
Hot Topic EARNINGS
1 mins to read

Telecom shares hit new low, but worse to come - analysts

Telecom hit another all-time low on the NZX today.The company's shares (NZX: TEL) finished the week at $2.11 - down 4 cents (1.86%) for the session and well off their 52-week high of $2.88.

Chris Keall
Fri, 19 Mar 2010

Telecom hit another all-time low on the NZX today.

The company's shares (NZX: TEL) finished the week at $2.11 - down 4 cents (1.86%) for the session and well off their 52-week high of $2.88.

Since it reached $2.59 on January 8, it’s been all downhill for the troubled telco, which has warned investors that costs associated with its string of XT failures, and the government’s new rural telecommunications plan, will weigh on profit.

Is the bottom in sight.
At $2.12, is it time for bargain hunters to come out?

Or will Telecom fall further?

"It probably will," Forsyth Barr analyst Guy Hallwright told NBR this afternoon.

"Looking ahead there's not a lot of good news out there."

Mr Hallwright noted hat on May 7 Telecom is due to announce a dividend change - widely presumed to be a drop from 24 cents per share p.a. to 20 cents or 18 cents.

"Plus there's the big one: whatever the government's going to do with the fibre initiative and hard to see that benefiting Telecom."

Previously, Mr Hallwright has told NBR he would start to get itchy fingers if Telecom fell below $2. Now, that's a real possibility.

"I suspect it will go there. It hasn't reached the bottom."

But once Telecom does dip below $2, "at that point all the bad news will be in the price," said Mr Hallwright.

NZ First Capital analyst Greg Main sees an attractive entry point "in the low $2s".

Mr Main also sees the government's $1.5 billion fibre contract - however that pans out - easily eclipsing Telecom's run of XT woes, or the pending rural broadband plan.

READ ALSO: Telecom slump hits Reynolds in the pocket

Chris Keall
Fri, 19 Mar 2010
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Telecom shares hit new low, but worse to come - analysts
3537
false