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New Zealand rules on Telecom Corp split

26 сентября 2007

New Zealand’s government confirmed on Wednesday that Telecom Corp, the nation’s biggest listed company, must split into three operating divisions by early next year.

David Cunliffe, communications minister, said Telecom, a former state-owned monopoly, has until the end of March 2008 to separate into wholesale, retail and networks units.
The operational separation is designed to boost competition in New Zealand’s telecommunications sector and encourage high-speed internet services.
It builds on an earlier government directive requiring New Zealand’s biggest telephone company to give rivals such as TelstraClear, owned by Australia’s Telstra, greater access to its local loop - the copper wires that link telephone exchanges to customers - by later this year.
Telecom Corp shares were up 3.3 per cent at NZ$4.44 as the close of trading approached even though the ruling had been widely expected.
The group’s stock traded around NZ$5.50 before the government’s regulation plans were first announced in May 2005.
Telecom Corp warned last month that tougher competition and rising costs would hit its profits in 2008.
Mr Cunliffe said the operational separation of Telecom was “a key part of the government’s strategy to deliver a more effective telecommunication sector. It will underpin increased competition and efficient investment for the long-term benefits of all New Zealanders.”
Telecom, which has four weeks to respond to the ruling, said the government’s implementation requirements would be “demanding”.
The group also reiterated comments made in August that the split could cost it about NZ$200m in capital expenditure over the next four years along with up to NZ$40m a year in operational costs.
However it said that its plans for operational separation were “well advanced on a number of fronts”.
Mr Cunliffe had been considering an alternative proposal by Telecom to spin off its network assets into a separate company, which could then be sold.
But the company had since “indicated they would prefer to pursue operational separation”, he said.
Mr Cunliffe and Telecom denied a newspaper report that they had been in talks to sell off the group’s networks unit.
Telecom retained the option to pursue a voluntary structural split at a later date, the minister said.
Incoming chief executive Paul Reynolds, who is due to start at the company in the next few weeks, is a former head of BT Wholesale, a division of British Telecom. Mr Cunliffe said the reform of BT had provided the model for Telecom’s operational separation.
Analysts expect Mr Reynolds to quickly push through the government reforms so that the company can focus on arresting its earnings slide.

Источник: Financial Times

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