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Re-investment plan and buyback not to proceed

5 September, 2008


Dividend re-investment plan and buyback not to proceed

Telecom New Zealand announced today that its dividend reinvestment plan, and the associated on-market share buyback of its ordinary shares, will not proceed this quarter in respect of the dividend payable on Friday, 12 September 2008.

Shareholders who have elected to participate in the dividend reinvestment plan will receive a cash dividend at the same time as dividends are paid to shareholders who do not participate in the dividend reinvestment plan, ensuring that all shareholders are in an equitable position.

This decision is related to Telecom’s announcement at its annual results on 8 August 2008 that it is evaluating the opportunity to accelerate the delivery of national WCDMA broadband mobile coverage at 850mhz (W850). This is a strategically important and material decision.

For this reason, Telecom considers it is not prudent to proceed with the issue of shares under its dividend reinvestment plan for the upcoming quarterly dividend, or undertake the associated on-market share buyback of Telecom ordinary shares.

Telecom considers this approach to be in line with best practice corporate governance.

Telecom will update the market of any material developments in connection with any formal proposal on W850 at the time a decision is made.


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