Telecom NZ, govt 'discussing separation'

Telecom NZ, govt 'discussing separation'

Summary: NZ Opposition Labour MP Clare Curran says she has it on good authority that Communications Minister Steven Joyce met Telecom NZ CEO Paul Reynolds last week and discussed the possibility of the incumbent structurally separating its business.

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NZ Opposition Labour MP Clare Curran this week said she had it on good authority that Communications Minister Steven Joyce met Telecom NZ CEO Paul Reynolds last week and discussed the possibility of the incumbent structurally separating its business.

The incumbent telco was forced by the former Labour government to operationally separate.

"Word has it that Telecom is under pressure from the government to have a good think about structural separation. I have it on good information that Steven Joyce and Paul Reynolds (Telecom CEO) met late last week. And that separation was on the agenda," Curran wrote on the Opposition's Red Alert blog yesterday.

Curran believes that a separated Chorus could in fact provide better value for Telecom's shareholders and become a more active and useful participant in the government's plans for a new national broadband infrastructure.

Reynolds has already ruled out Telecom divesting a majority holding in Chorus, and has stated that structural separation is not on the government's agenda, based on earlier meetings with Minister Joyce.

The thorny issue of Telecom's participation in the Ultra-Fast Broadband roll-out is raising its head with the Invitation to Participate (ITP) document being released by the New Zealand Government.

Despite lobbying by Telecom, the government's rules for participation in the UFB project make it impossible for the incumbent to have a majority holding of its infrastructure arm, Chorus.

After a slow start, the NZ Government is pressing ahead at a high pace with its plans for new national fibre-optic to the premises infrastructure, as part of a NZ$3 billion plan to ensure the country has 100/50Mbps down/upstream speeds for three quarters of its population by 2015.

Rosalie Nelson, telecommunications research manager at analysts IDC, said it was difficult to see where the commercial incentives for telcos lie in the ITP. The government remains firm on its stand that any telecommunications service provider cannot have a majority shareholding in a Local Fibre Company or LFC.

Board structure rules for LFCs state that half of the directors are to be appointed by the Crown Fibre Holding company, with the other half coming from UFB partners. This is set in stone for 10 years, after which the board composition can change, Nelson said, but only if the partner in question has no other telecommunications services business.

Telecom New Zealand spokesperson Mark Watts declined to comment on the ITP document and the issues surrounding it, beyond saying that the company is digesting the details of the paper.

Topics: Government, Government AU, Telcos, New Zealand

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