1st of July Important date in Tel's calander $4.62, page-5

BK,

From today's Communications Day publication:

Verizon ready to sell off stake in Telecom New Zealand

Telecom New Zealand’s major shareholder, Verizon Communications, is reportedly preparing to put its
20.8% stake in the New Zealand incumbent on the auction block.

The Australian Financial Review reported this week that the chance of the $NZ2 billion stake being sold in the
next three months had heightened after ratings agency Moody’s threatened to cut Verizon’s long-term debt
single A-1 credit rating, citing its $US63 billion debt as a “significant source of concern”.

Even though $NZ2 billion would put only a small dent in Verizon’s debt position, investment banks were “all
over the selldown like a rash”, the newspaper said.
A convertible note structure payable in two instalments and with a semi-annual coupon, was put together by
several banks earlier this year, it said. It apparently stalled over differences on underwriting and a drop in
Telecom NZ’s share price. The carrier had, however, had been one of the best-performing regional
telecommunications companies in recent weeks, despite the Verizon overhang.

This put it back into Verizon “exit door” territory.

Investors have not been fazed by an anticipated writedown of the book value of Telecom NZ’s Australian subsidiary AAPT in the order of $NZ800 million to $NZ1 billion.

This would result in a deterioration of its accounting interest cover and gearing ratios, but Telecom NZ had
strong cash flows that should lessen the likelihood that it would need to raise equity capital, the paper said.
Verizon, the biggest local phone company in the US, had its first-quarter profit wiped out by $US2.5 billion in
costs for declining investments and acquisitions. It said earlier this year that it would look to reduce its holding in Telecom NZ to below 20% in small steps.