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Telecom NZ splits in two

Groundhog day as roll out starts on Kiwi broadband network

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Telecom New Zealand will spin off its network operations, branded Chorus, into a separate listed company by year end.

The split comes at New Zealand’s incumbent telco embarks on building part of a national government funded ultrafast broadband network after securing a tender for 70% of the deployment. Work on the network will start in August covering 24 regions, including Auckland, Wellington, the lower North Island and most of the South Island.

The structural separation, will result in two listed entities on the stock exchange and still requires a law change and shareholder approval.

Following the de-merger Telecom NZ will be a retail-focused telecommunications business comprising fixed, mobile and ICT businesses. It will also provide some other non-regulated services to the industry, such as national backhaul and certain commercial wholesale services.

Chorus will be a nationwide fixed line access network infrastructure operator that will offer services to RSPs (retail service providers) on an open access basis to allow them to build and deliver innovative services to New Zealand end-users.

Under the agreement, the government's Crown Fibre Holdings will invest NZ$929 million in Chorus through a mix of debt and equity as the broadband network is built.

The government investing a total of NZ$1.5 billion to build the national network, promising to deliver high speed internet to 75% of the country by 2019.

Meanwhile Telecom NZ has registered a new trade mark, 1 Mobile, to support a multi-brand strategy in the mobile market.

The company has yet to comment on the new branding strategy but speculation suggests that it plans to launch a low-cost brand to sit beside current mobile offering, XT and go head to head with the latest budget brand to enter the market, 2degrees. ®

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