Telecom New Zealand has hit back at shareholder concern over its plans to fund the NZ$574 million (US$358 million) expansion of its 3G network, announced this week. The operator has said it will run a dividend reinvestment plan to help fund the network, but New York-based hedge fund Elliott Investment, owner of 3 percent of Telecom, believes it should not issue more shares to help pay for the rollout. “Does the board seriously believe that issuing more stock with the stock price at an all-time low is beneficial to shareholders?” Elliott said in a statement to Bloomberg. The report notes that Elliott has previously argued that Telecom should sell its network to improve shareholder returns. “Does the board understand that value can be created for shareholders by optimising the capital structure?” he added in the statement to Bloomberg. In response, Telecom chairman Wayne Boyd reportedly said the operator welcomes “vigorous debate and discussion” around its performance and strategic direction but believes its strategy “not withstanding the near-term financial implications, is in the best interests of our shareholders and the long-term strategic and financial performance of the company.”

On Wednesday, Telecom New Zealand announced it is to invest in a nationwide WCDMA/HSPA network in the 850MHz band, marking the end of the operator’s internal review of its future mobile technology deployment. Initial WCDMA services will be launched next month, with full launch (reaching 97 percent of the country’s population) targeted by June 2009. The operator claims this timeframe will be a year in advance of its competitors. According to Wireless Intelligence, Telecom is New Zealand’s second-largest mobile operator (just behind Vodafone), with 2.2 million customers and a 48 percent market share.