UFB delay cans Telecom Q1 dividend reinvestment

UFB uncertainty cans Telecom Q1 dividend reinvestment scheme

by Pattrick Smellie

Nov. 17 (BusinessDesk) – Telecom Corp. is to cancel its dividend reinvestment scheme for the first quarter dividend because of share price uncertainty created by the delayed announcement of preferred partners for the government’s ultra-fast broadband project.

The reinvestment scheme triggers an on-market share buyback by Telecom to maintain issued capital at stable levels.

The potential for the imminently expected UFB announcement to move the share price has prompted the cautious approach, a Telecom spokesman told BusinessDesk.

While uptake for the scheme ran at only 6% in the last quarter, “Telecom considers it is not prudent to proceed”, citing “best practice corporate governance.”

The 3.5 cents per share fully imputed first quarter dividend is payable on Dec. 3, and was announced on Nov. 5, at a time when Telecom had “had anticipated an imminent announcement in relation to the UFB initiative, in accordance with Crown Fibre Holdings’ (CFH) expected timetable.”

That timetable has now over-run, although BusinessDesk inquiries indicate that decisions on preferred providers are still likely within the 10 to 14 days, with Telecom firmly in the tent for inclusion in the $1.35 billion government-sponsored project.

The first three preferred providers, announced in October, were all regional electricity networks and members of a rival bidding consortium, the Regional Fibre Group.

Telecom said it is not aware of the current timing for the next CFH announcement or the likely outcome of the UFB process.

“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 treated equitably,” the national telco said in a statement to the NZX.

(BusinessDesk) 09:53:06

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