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TeamTalk shares slump to record low

NZN 13/06/2016 Paul McBeth

TeamTalk shares slumped to a record low after the telecommunications network company downgraded earnings guidance and said it won't pay a final dividend this year as its 2012 purchase of rural broadband provider Farmside continues to suck up capital.

The shares fell as low as 48 cents, and were recently down 18 per cent at 49 cents, adding to the 11 per cent slide on Friday when Wellington-based TeamTalk said second-half earnings hadn't met expectations.

The stock rose as high as $3.20 in early 2013, after the Farmside purchase settled, but has steadily dropped as it struggled to integrate the rural internet service provider into its existing business.

The company said earnings before interest, tax depreciation and amortisation would be "slightly down" on the $6.4 million posted in the first half, and that it wouldn't pay the 4 cents per share final dividend previously flagged due to "substantial capital requirements" and the desire to give the incoming chief executive more flexibility for the company.

On Friday, TeamTalk said it signed a multi-year contract with Optus Satellite to provide improved internet speeds via satellite which would have a "negative impact" on its accounts requiring several million dollars of capital expenditure over six months.

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