Taxpayers give $1 Billion – Telecom shareholders make $1.8 Billion

13 Sep

<b>Taxpayers give $1 Billion Telecom shareholders make $1.8 Billion </b>

How has Telecom managed to double its share price in little over 12 months?  Why is John Key seen as the man most likely to have helped the rich get richer and poor get the blame for this?

Remember little over a year ago when it seemed as though a new dawn was about to break on New Zealand’s torpid, yet over-priced telecommunications network?

There was plenty of talk about the Telecom monopoly having finally been broken, that the introduction of @ Degrees and its successful launch looked as though that would be the final nail in the coffin of the monopoly which has had its jackboot on telephone communications in NZ since Maui first paddled his canoe?

Things looked so bad for telecom that their share price had plummeted from the high of 6.61 per ordinary share in March 2005 to $1.78 by July 2010. (Source <a href=”http://investor.telecom.co.nz/phoenix.zhtml?c=91956&p=irol-stockLookup”&gt; Telecom’s own stock quotation page<a>).

The errors, pratfalls and incompetence that had got a company which should have moved from strength to strength to that position are legion and well documented.  Most can remember Gattung’s Sydney conference where the then ceo appeared to tell an audience of potential investors that Telecom had got where it is today by telling porkies.
The reason that Telecom shares had fallen so far had little to do with the average kiwi’s antipathy towards their phone company.  There has rarely been a time in Telecom’s history when it hasn’t been universally despised by its customers.  no the reason capitalists no longer wanted to own a piece of original kiwiana was because it seemed that the NZ government was no longer prepared to let Telecom have the box seat whenever that government decided use its encyclopaedic telecommunications regulations to play favourites.

Even NZ’s hacks, the journos who had once queued up to get that ‘special offer’ of a free mobile and unlimited bandwidth, that had often coincided with favourable telecom stories in the paper, on TV and radio, had decided that ‘getting too close to Telecom could risk their objectivity’.

Yeah right you sleazy muck raking trough guzzlers, we know why you backed off.  It had nothing to do with journalistic integrity and everything to do with not getting caught.

It is bad enough that half of NZ’s journos got caught jumping at the chance of a free trip to the US courtesy of that nation’s intelligence services.  Or that right wing slappers like Kerre Woodham spend their summers hanging off every word of some Nazi’s claim “that whiteys are the shitz” at the annual <a href=”http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10741289″>”Sociopath in the Sounds”</a> conference, held in Marlborough Sounds annually.  Getting caught lying for something as tacky as an IPhone really doesn’t cut it with one’s peers.  ‘Going to DC’ as these trough guzzlers are wont to call it, at least provides an opportunity to retread some old hacks’ yarns about getting pissed with the prez’ right hand man/woman.

So by July last year Telecom was in more shit than a Mangere duck and wasn’t looking like it was going to get out any time soon.

The government had promised to set up its own ultra-fast broadband network.  That involved running fibre optic cable to every household (well 90% of em) in New Zealand by the year 20-something not too distant.

That would spell the end of the penultimate Telecom monopoly, Telecom would no longer own the only hardware network reticulated to every kiwi home.  The last monopoly that of being the proud controller of all electronic communication in and out of NZ seemed to close to the end as well when some well-known kiwi capitalists announced they wanted to provide an alternative to Telecom’s Southern Cross cable.

So given that scenario it wouldn’t have been unusual had Telecoms newly claimed humility been reflected in its dealings with us, the mugs who have to pay top dollar for an awful product.  Yet by August, right when telecom shares were bumping along the bottom of their all-time low, Telecom had decided to give its Xtra customers another quick going over.

Reynolds may have said “Haw!!  Gi the bampots a guid smash in the chops until they so feart they shittin tanners oot their durtbox” which roughly translated means “hit the customers hard until they offer us a lot more money”.
No more unlimited downloads, from now on everyone had to pay and pay for the right to actually use their expensive broadband even though it seemed that the competition would soon be able to offer even better deals.  Now anyone with a couple of computers running Win7 would run over their limit every month just by keeping their systems up to date.

It seemed an odd thing to do right when Telecom should have been falling over backwards to hang on to its customer base.  After all soon there would be competition.  Did they know something we didn’t?

Certainly by October the share price was steady on $2.05 never falling below that number.  This was at a time when most people still thought telecom’s days were numbered.

Who knows who knew what because the insider trading laws in NZ couldn’t catch a cold.  But what is apparent is that in the lead up to the silly season announcement that would shock those New Zealanders who had been contentedly looking forward to NZ joining the rest of the world with fair open and competitive phone and internet providers, Telecom shares began an upward climb.  Gently quietly and some days without too much volume the share price of Telecom ordinaries began an ascent.  Then a big purchase of 70 million shares early in December pushed the price into the late $2 teens.

On Friday the 17th of December 2010 the Key government announced that Telecom had won preferred bidder status in more than 70% of the areas getting the fibre optic rollout.  Over 20 million shares were bought that day pushing the price to $2.20.

Right in the middle of the ‘silly season when us plebs are too busy Xmas shopping to use our stunted brains (or that is what Nat party strategist Murray McCully thought).  Of course for the rich the only shopping that interested them was more telecom shares.  The price has risen consistently since that announcement and accelerated once it was announced that Telecom would definitely get a fat wedge (just under a billion more than $950,000,000) of our tax money to shore up their monopoly.

By the 26th August 2011 Telecom shares had reached $2.74 each.   Now subtract 1.78 from 2.74 and you get 0.96 multiply that by the number of ordinary shares to arrive at $1,847,718,720 the profit made by NZ investors from the mug taxpayers giving up $1 billion.  Double the cost of the investment -why didn’t they put the dosh up themselves?  Will they pay us back?  Fat chance they have their monopoly back we can expect to get well screwed for our charity to the rich.

Remember this is just the kiwi shareholders.  The septic tanks got an opportunity to stick their fingers into the pie through the New York Stock exchange.  Over there the amerikan shares were trading at

It was a busy shopping day/xmas party getting shuzzled night – Friday the 17th of December 2010, that the Key government announced that Telecom had won preferred bidder status in more than 70% of the areas getting the fibre optic rollout.  Over 20 million shares were bought that day pushing the price to $2.20.

The announcement came right in the middle of the ‘silly season’ when us plebs are too busy Xmas shopping to use our stunted brains (or that is what Nat party strategist Murray McCully thought).  Of course for the rich the only shopping that interested them was more telecom shares.  The price has risen consistently since that announcement accelerating once it was announced that Telecom would definitely get a fat wedge (just under a billion; more than $950,000,000) of our tax money to shore up the monopoly that most of us hoped and believed would be gone for good.

By the 26th August 2011 Telecom shares had reached $2.74 each.

Now subtract 1.78 from 2.74 and you get 0.96

Multiply that by the number of ordinary shares to arrive at $1,847,718,720

$1,847,718,720 the profit made by NZ investors from the mug taxpayers giving them $1 billion.  Double the cost of the investment -why didn’t they put the dosh up themselves?  Will they pay us back?  Fat chance.  Now they have their monopoly back we can expect to get well screwed for our charity to the rich.

This is just the kiwi shareholders.  The septic tanks got an opportunity to stick their fingers into the pie through the New York Stock exchange.  Over there the amerikan shares were trading at US  $6.26 in July 2010, and they peaked at US $11.47 on the 26th of August 2011.

Do that math and you’ll find that the poor old kiwi shitkicker, the wage earner who pays PAYE, gave amerikan stockholders in Telecom NZ  a 54.57% return on their investment in little over 12 months.  Of course once the typically generous Telecom dividend to our absentee landlords is included, those ‘investors’ cleaned up over 60% for the period.

Interestingly the profits across the ditch on the ASX have been far more modest than NZ or amerika.

There was a surge early in 2011 after the implications of the preferred bidder thing hit, but the price fell away again down to AUD $1.40 prior to the final announcement of the ultra-fast tenders.  Once it became certain that Telecom had won most of the major population centers the price picked up to peak at AUD $2.12 and has fallen back to $1.95.  Australian investors appear rightly concerned that the proposed ‘de-merger’ of Telecom will result in a downgrading by standard and poors, moody’s and the rest of financial crooks who do the heavy lifting for the mega-capitalists who are currently attempting to own everything.

A downgrade means Telecom will have to pay more for any money it has to raise for itself, money which we aren’t made to give them by the current band of crooks in the beehive.

Kiwis need to ask themselves

NZT:NYSE July 2010 $6.26

26th August 2011  $11.47

Sydney

http://www.findata.co.nz/markets/stockquote/NZX/TEL.htm says there are 1,924,707,000 ordinary shares issued

2010 February: Second major network outage for Telecoms XT Mobile Network caused by failing Radio Network Controller in Christchurch.