New Zealand shares fell, as the weight of Telecom, the biggest company on the exchange, held back the NZX 50 Index in the face of a region-wide rebound. Telecom rivals Telstra and Vodafone today confirmed they're in talks to consolidate their local units.
The NZX 50 fell 31.20 points, or 0.9 per cent, to 3420.79. Within the index, 28 stocks fell, 15 rose and seven were unchanged. Turnover was a lower-than-average $62 million.
Telecom fell 4.1 per cent to $2.435 after Telstra, Australias biggest phone company, said it is in talks with Vodafone over the possible sale of its TelstraClear unit in New Zealand. A tie-up would create a stronger competitor for Telecom and possibly give Vodafone an advantage in making content deals.
A deal would create "a faster competitor" for Telecom, "building a bigger company than now and with their own content and network," said Mark Warminger, a portfolio manager at Milford Asset Management.
The decline in Telecom stock would provide a buying opportunity at some point, given the company's returns and 11.8 percent dividend yield, he said.
Sky Network Television, the pay-TV operator controlled by News Corp, fell 0.6 per cent to $4.90. The company's content deals with telecommunications companies are facing scrutiny from the Commerce Commission.
New Zealand shares fell as benchmark indexes across the Asia Pacific region rose, rebounding from a weekend of bad news including US jobs and manufacturing data. Australia's S&P/ASX 200 Index was 1.3 per cent higher in afternoon trading as the Reserve Bank cut its cash rate a quarter point as expected.
Fisher & Paykel Appliances fell the most on the NZX 50, down 5.6 per cent to 51 cents as the kiwi dollar edged up from its recent lows.
Xero, the online accounting company, slipped 0.5 per cent to $4.08 after Australian rival MYOB launched a promotion with Westpac offering free website services.
Rubicon, the biotech company focused on forestry, fell 10 per cent to 35 cents after announcing a fully-underwritten one-for-three rights issue to raise $21 million. The company will also extend its US$20 million bank debt facility through to July 1, 2014.
Kirkcaldie & Stains, the Wellington department store and property group, was unchanged at $2.80 after the investment vehicle of father and son businessmen Selwyn and David Cushing disclosed its stake has risen to 19.55 per cent, near the 20 per cent level that would trigger a full takeover.
Metlifecare was unchanged at $2.08 after saying an appraisal report by Northington Partners deemed its proposal to merge with Vision Senior Living and Private Life Care Holdings is fair to the rest home operators minority shareholders.
Nuplex Industries, the specialty chemicals maker, rose 0.9 per cent to $2.23 after saying full-year earnings would be at the bottom end of its range although second-half trading has met expectations and margins have improved.
During the period, in addition to challenging market conditions, exchange rates and raw material prices have fluctuated significantly, said chief executive Emery Severin. However, with our focus on managing those elements we can control, we have seen an improvement in unit margins.
OceanaGold, the operator of the Macraes gold field, climbed 11 per cent to $2.59 as the spot price of gold held its recent gains, trading at US$1,618.04 an ounce, from as low as US$1,538.05 last month.
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Incumbent telcos must pay new 2G price: DoT - Times of India
Industry calculations show if the Cabinet approves the telecom department's proposal, the government can garner a minimum of Rs 1,20,000 crore from existing operators such as Bharti Airtel, Vodafone, Reliance Communications and Tata Teleservices.
The proposal has been sharply criticised by AUSPI, the industry body that represents dual-technology operators, which says it will impact its members such as RCom and Tata Teleservices far more than GSM operators such as Bharti and Vodafone.
"Our calculations show that on an average, each of the seven pan-India operators will have to shell out about Rs 15,000 crore at the Trai-prescribed base reserve price to match the auction prices. Dual-technology players such as RCom and Tatas will have to pay a higher amount because they hold second-generation airwaves for both GSM and CDMA services," said a telecom industry executive.
A panel of ministers, headed by Finance Minister Pranab Mukherjee, will meet on Tuesday to take a call on the reserve price as well as the quantum of airwaves that should be sold in the upcoming auctions.
The Cabinet note, which has been circulated to all ministries for their comments, says this 'one-time fee' is being imposed on all existing mobile phone companies for creating a level playing field.
While examining the implications of the Supreme Court order (quashing 121 licences issued in 2008 by former telecom minister A Raja), it was noted that several of the operators who have received spectrum ranging from 1994-2009 had paid price ranging from zero to Rs 1,658 crore on pan-India basis.
Consequently it was observed that in a situation where new players who will come in will pay for entire spectrum, there will be no level playing field between them and those who received spectrum at administrative price," the note said.
While the government plans to impose this one-time fee prospectively, the Cabinet note further said depending on the outcome of the Presidential Reference in the Supreme Court, a decision to impose this charge with retrospective effect could also be taken.
The telecom department has said the airwaves held by existing players could not be used for deploying any technology of their choice, but spectrum sold in the upcoming auctions would offer this flexibility. Paying this one-time fee will provide existing telcos 'with the same facility of liberalised usage of spectrum', said the Cabinet note, implying this would enable an operator to offer 3G services on 2G frequencies.
The Cabinet note said spectrum sharing would be permitted only after telcos paid the one-time fee.
The industry body representing GSM operators said its members were awaiting clarity on the proposed policy change. "Telecom Minister Kapil Sibal and other top government officials have been meeting mobile phone companies to get their feedback on this issue. We are awaiting clarity and details on the proposal," said Rajan Mathews, director-general of the Cellular Operators Association of India.
But AUSPI slammed the proposal and said it was "not legally tenable and completely contrary to the licence conditions to which licensee and licensor were bound'.
"This new proposal puts late entrants like Reliance and Tata at a disadvantageous position vis-a-vis all those GSM operators whose licences are due for renewal between 2014 and 2016. GSM operators anyway have to get their licences renewed as per the existing contract terms during 2014 to 2016," said AUSPI.
It pointed out that 8, 10 and 9 licences of Bharti Airtel, Vodafone, and Idea Cellular, respectively, were due for renewal during 2014 to 2016 and the impact on these operators would only be for 14, 13, and 6 service areas only. "However, the new proposal is going to impact practically all the licences of our member operators," said the industry body.
AUSPI further added that the DoT move would be in full breach of the binding terms and conditions of the licence agreement. "This new proposal would amount to the unilateral amendment /modification of a material clause of the licence agreement," it said.
But the telecom department said in the Cabinet note that while the tenure of the licences was 20 years, the government had the right to amend the terms and conditions of the licence anytime.
The upcoming 2G auctions following the cancellation of licences by the SC will be in the 1800 MHz band. But telcos hold 2G spectrum in two different frequencies - incumbents such as Bharti, Vodafone and Idea have 2G airwaves in the 900 MHz band, considered most efficient, in about half the country.
"As per Trai's recommendations, the reserve price of 900 MHz bands shall be at two times the reserve price of 1800 MHz band. In the absence of auction price, this multiplication factor or reserve price, if available, may be applied for charging in the 900 MHz bands from the service providers," the note adds.
The telecom department has also asked the government to reject Trai's proposal to levy a spectrum transfer charge for M&As in the sector.
France Telecom Won’t Sacrifice Investment as Dividend Cut Looms - Bloomberg
France Telecom SA (FTE) Chief Executive Officer Stephane Richard said the company’s 2012 dividend will be reduced “reasonably” and the owner or the Orange mobile-phone brand won’t sacrifice investments as it responds to price cuts by discounter Iliad SA.
“For 2012, it is clear that we will lower the level of our dividend to take into account how our results evolve,” Richard said in an interview with BFM Business broadcast on radio. “Our dividend will go down reasonably.”
France Telecom said on Feb. 22 that its 2012 payout will be in a range of 1.21 euros ($1.51) to 1.35 euros a share, cutting the forecast from 1.40 euros a share, as the Paris-based company projected a decline in operating cash flow.
A France Telecom spokesman said today Richard’s comments do not mean further reductions from the February announcement.
With one of the highest dividend yields in the telecommunications industry in Europe, France Telecom has been under pressure to lower its dividends. Telefonica SA (TEF) cut its payout forecast in December and on May 30 slashed the cash portion of its 2012 dividend by 69 percent.
To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
France Telecom CEO Stephane Richard
Antoine Antoniol/Bloomberg
Stephane Richard, chief executive officer of France Telecom SA.
Stephane Richard, chief executive officer of France Telecom SA. Photographer: Antoine Antoniol/Bloomberg
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