New Zealand's Telecom Corp: Split challenging but workable
Telecom Corp., New Zealand's listed biggest company, said Wednesday government plan to split the telecommunications provider into three operational businesses will prove challenging but workable.
By Agencies |
WELLINGTON: Telecom Corp., New Zealand's listed biggest company, said Wednesday government plan to split the telecommunications provider into three operational businesses will prove challenging but workable.
The split of Telecom into wholesale, retail and networks arms aimed at increasing competition in the sector would have to occur by March 31, 2008, Communications Minister David Cunliffe said earlier Wednesday.
Telecom Corp., the country's largest fixed line phone company by subscribers, now has 20 working days to prepare a draft separation plan, he said.
The deadline to submit the draft was a tight one and would be a demanding task, the company said in a statement.
``Our initial assessment ... indicates that it represents a demanding multiyear program of significant change for Telecom and the industry,'' said Mark Ratcliffe, Telecom's chief operating officer for Technology and Enterprises.
``With respect to the demands they will place on our people, the determination requirements are challenging though workable,'' he added.
The separation, along with plans to open Telecom's local loop network to rivals from later this year, is designed to foster competition, particularly in high-speed Internet services.
``It will underpin increased competition and efficient investment for the long term benefits of all New Zealanders,'' Cunliffe said.
Under the split-up, Telecom will be required to set up a separately branded networks unit and operate its divisions at arms length. The company will also have to establish an independent oversight group to monitor the businesses.
Telecom said it didn't anticipate any net change in overall staff numbers.
Telecom shares rose 3.5 percent to NZ$4.45 (US$3.30; euro2.33) by mid afternoon Wednesday as 5 million shares changed hands. They closed Tuesday at NZ$4.30.
The split of Telecom into wholesale, retail and networks arms aimed at increasing competition in the sector would have to occur by March 31, 2008, Communications Minister David Cunliffe said earlier Wednesday.
Telecom Corp., the country's largest fixed line phone company by subscribers, now has 20 working days to prepare a draft separation plan, he said.
The deadline to submit the draft was a tight one and would be a demanding task, the company said in a statement.
``Our initial assessment ... indicates that it represents a demanding multiyear program of significant change for Telecom and the industry,'' said Mark Ratcliffe, Telecom's chief operating officer for Technology and Enterprises.
``With respect to the demands they will place on our people, the determination requirements are challenging though workable,'' he added.
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Operational separation of the group is a key part of the government's strategy to deliver a more effective and competitive telecommunications sector. The separation, along with plans to open Telecom's local loop network to rivals from later this year, is designed to foster competition, particularly in high-speed Internet services.
``It will underpin increased competition and efficient investment for the long term benefits of all New Zealanders,'' Cunliffe said.
Under the split-up, Telecom will be required to set up a separately branded networks unit and operate its divisions at arms length. The company will also have to establish an independent oversight group to monitor the businesses.
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It also reiterated the view given in August that compliance with the operational separation model would likely cost it around 200 million New Zealand dollars ($148 million; euro105 million) in capital expenditure over the next four years, with operational costs of up to NZ$40 million ($30 million; euro21 million) a year over the period. Telecom said it didn't anticipate any net change in overall staff numbers.
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Ratcliffe added the company has not been in negotiations with government about selling its fixed-line network business. Telecom shares rose 3.5 percent to NZ$4.45 (US$3.30; euro2.33) by mid afternoon Wednesday as 5 million shares changed hands. They closed Tuesday at NZ$4.30.
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