Cindy's homwork

Telecom pays dividend quarterly, which reduce the time taken of distributing returns to shareholders. Its dividend policy was to pay approximately 85% of the net earnings as ordinary dividend distribution for the 2005-06 fiscal years. Usually, the Company pays dividend at the same rate for the first three quarters and the dividend for fourth quarter accommodates the target ratio for the whole year. For the first three quarters ended 30 June 2006, the dividend per share was 9.5 cents and the fourth quarter was down to 7.0 cents and a special dividend of 5.0 cents. Further, for the fiscal years 2006-07, the Company reduced the dividend payout to approximately 75% of the net profit (Telecom, 2007).
Since the takeover of AAPT took place in 1999, the Company has thrown more than $2 billion NZD for acquiring AAPT. Owing to the substantive outlay for merger Powertel with AAPT, Telecom used the proceeds of the sales of the Yellow Pages to finance the costs arising from the Australian operation, rather than using the money to pay dividend. According to funding costs in respect of the Australian operation, the Company cut the target dividend payout ratio by 10% of its net earnings for the financial year ended 30 June 2007. Consequently, Telecom considered a lower dividend payout target which reduced the cash returns distributed to shareholders.