Tele­com Corp. se­lected for pri­ori­tised talks on NZ broad­band plan

The Pak Banker - - Company& -

WELLING­TON: Tele­com Corp. has been se­lected for pri­or­i­tized ne­go­ti­a­tions by the New Zealand govern­ment to de­liver the ul­tra-fast broad­band ser­vices pro­gram in 25 re­gions, which may lead to a de­merger of the com­pany. The re­gions cover the en­tire coun­try apart from seven ar­eas al­ready as­signed to ri­vals and an eighth zone where there's an­other pri­or­i­tized bid­der, Crown Fi­bre Hold­ings Ltd. the agency over­see­ing the process, said in an e-mailed state­ment. The govern­ment is also in pri­or­i­tized talks with En­able Net­works for ser­vices in the South Is­land city of Christchurch and with the Flute joint ven­ture for broad­band in Dunedin.

The govern­ment is seek­ing part­ners for a NZ$1.5 bil­lion ($1.1 bil­lion) na­tion­wide fiberop­tic net­work that will de­liver fast In­ter­net to homes and busi­nesses. Tele­com, the nation's biggest tele­phone com­pany, has said it will de­merge to cre­ate a sep­a­rate net­work com­pany to sat­isfy govern­ment re­quire­ments.

"It puts Tele­com in the box seat in most of the re­main­ing ar­eas," said Guy Hall­wright, an­a­lyst at Forsyth Barr Ltd. in Auck­land. Still "it is only the an­nounce­ment of a pre­ferred bid­der rather than a deal so there's quite a bit of wa­ter to go un­der the bridge." Tele­com shares gained as much as 2.9 per­cent af­ter the re­port. It rose 2 cents, or 1 per­cent, to NZ$2.10 at the 5 p.m. mar­ket close in Welling­ton.

Auck­land-based Tele­com is propos­ing its Cho­rus net­work unit part­ner with the govern­ment, while the re­main­ing sales unit of­fers ser­vices as a struc­turally sep­a­rate com­pany.

"We re­main firmly of the be­lief that a struc­turally sep­a­rate Cho­rus as the cor­ner­stone of a na­tional frame­work for fiber is the most ef­fi­cient and ef­fec­tive way to de­liver the govern­ment's vi­sion," Chief Ex­ec­u­tive Of­fi­cer Paul Reynolds said in a state­ment to­day, wel­com­ing the se­lec­tion for fur­ther talks. Tele­com is open to part­ner­ship with other own­ers of fiber as­sets, in­clud­ing the par­ties cho­sen by the govern­ment, he said.

"These three par­ties have pro­vided at­trac­tive pro­pos­als in­clud­ing a com­bi­na­tion of ac­cess prices in line with those an­nounced last week, the abil­ity to com­plete the build within the al­lo­cated bud­get as well as hav­ing in­dus­try ex­pe­ri­ence and fi­nan­cial strength," Crown Fi­bre Chair­man Simon Allen said.

Com­mu­ni­ca­tions Min­is­ter Steven Joyce is look­ing for­ward to re­ceiv­ing rec­om­men­da­tions on bind­ing of­fers in the first quar­ter of 2011, he said in an emailed state­ment. -Bloomberg

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