Telecom shares (NZX: TEL) closed at all-time low of $2.17 yesterday as investors took fright at the government's new rural telecommunications plan.Today, the company's shares have hit a new low of $2.13 in late trading.
Telecom shares (NZX: TEL) closed at all-time low of $2.17 yesterday as investors took fright at the government’s new rural telecommunications plan.
Today, the company’s shares have hit a new low of $2.13 in late trading.
Under the rural plan, Telecom will lose the $23 million or so a year it received from rivals under the TSO Levy subsidise the cost of servicing around 60,000 so-called commercially non-viable rural customers.
A new scheme, to be introduced next year, will see all phone companies collectively contribute $50 million a year for the next five years under a Telecommunications Development Levy (TDL).
$42 million of the $50 million-a-year of the TDL will go toward a contestable fund to expand rural broadband.
Analysts give Telecom a good shot at winning at least some of the TDL money as telcos shortly begin to compete for the right to tap the levy and lay rural fibre.
However, Telecom still sees the revamp as a net negative. Yesterday, it notified the NZX that the rural telecommunications reform could shave up to $56 million off ebitda for each of its 2011, 2012 and 2013 financial years.
Projected ebitda for 2011 is around $1.73 billion.
