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Things have been quite on the board for a while. I'm finally getting around to taking a look at the results for the 9 months ended 31 March 2007 which were published a while ago (sale of Yellow pages and all that) and thought I would jot down a few thoughts. To be honest I'm getting to the point with this type of company in my portfolio (where I hold specifically for the yield) where I'm paying very little attention to the detail. So long as the company keeps doing what it does and keeps paying me my dividend I'm not going to worry too much about things. If you have enough big companies like this in your portfolio you can just sit back, relax and watch the dividends roll in without stressing too much about the day-to-day operations of your companies. About the only thing that would really make me sit up is if there was a divi cut or if the very existence of the company was threatened. But I digress now...

The headlines

The reported earnings for the 9 month period was $699 (I'm including the Yellow Pages Group results here). Management have since come out and said that the profit target for the year is $870 to $890. This means that there is $170 to $190 expected from the final quarter (a quarter that will not include Yellow Pages results).

Yellow Pages has been sold for $2.1bn and the proceeds are in the bank.

The board proposes to return $1.1bn by way of an off-market share cancellation (I got excited when I read this because when I was a baby lawyer I used to do these transactions for NZ companies - but now I'm digressing again). I can understand those who wanted to see this paid as a special divi and wanted to see it all paid as a special divi. I can't say that I'm entirely suprised that they wanted to retain some of that money in the form of a warchest to accomodate future capital expenditure and operational flexibility given the current regulatory environment.

Dividend policy - 75% of net earnings which is unchanged (i.e Telecom will be paying out $652 - $667m in dividends to its shareholders). 7 cents was paid out in the quarter bring the total to 21 cps paid out so far this year. The quarterly results tell me that there are 1,998 shares in issue so the annual payout should be around 32.5 - 33.5cps - so I'm expecting a final quarter dividend of about 11.5 - 12.5 cps. At a current market price of $4.52, Telecom are currently on a gross yield of 7.4%. That's about the same as it was a year ago and also doesn't take into account the capital return / share cancellation / share buyback.

Regulatory outlook - still uncertain so no change.

Aust - still a mess so no change.

So I don't think too much has changed has it? Still the market leader. Still paying a whopping dividend. Still plenty of regulatory uncertainty.

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When Life Gives You Lemons
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