Telecom NZ fully investigating structural separation

Telco wants to do all it can to secure a place in the New Zealand Government’s Ultra Fast Broadband build-out

Telecom NZ (ASX: TEL) has announced it is willing to make major concessions in order to secure a place in the New Zealand Government’s Ultra Fast Broadband build-out.

In an ASX statement the telco said it was “fully investigating” structural separation in order to align the interests of its equity and debt holders with those of the Government and people of New Zealand.

“The Government’s UFB initiative will fundamentally reshape the structure of the entire telecommunications industry in New Zealand and Telecom is therefore undertaking a thorough assessment of the merits of structural separation,” Telecom CEO, Paul Reynolds, said in the ASX statement.

Reynolds suggested that the price the New Zealand Government would have to pay in as the price for Telecom’s separation would be an easing of the regulatory burdens and obligations upon it.

“Telecom is required by legislation to deliver significant system and technology projects envisaged for a pre-fibre world,” Reynolds said. “A large proportion of these projects must be deployed this year so it seems sensible at this time to reassess these projects to avoid significant congestion and waste.”

These projects included the bulk migration of existing broadband customers onto a new copper-based broadband service, and the removal of requirements for telecom to migrate 17,000 customers onto a new VoIP over copper service by the end of the year.

The telco is also pushing for the requirement for it to build a new set of wholesale systems, that Telecom claims are not consistent with the industry structure implied by the UFB network, be scrapped.

In May, Telecom said it had signed a $30 million agreement with telecommunications wholesaler and franchisor, Telcoinabox.

In April Telecom revised its financial guidance for the financial year 2011 through 2013 to reflect the impact of several regulatory and market factors.

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