Telecom shares fell 6 per cent yesterday after the company missed out on being named for priority talks in the Government's $1.5 billion ultra-fast broadband (UFB) initiative.
Telecom did not make a list of three initial investment partners named for prioritised talks for a portion of the project.
It is on a list of 14 companies which the Government's Crown Fibre Holdings (CFH) said remained important contenders for future negotiations and would continue in a partner selection process.
The three selected parties are Alpine Energy covering Timaru, the Central North Island Fibre Consortium covering the wider Hamilton area, Tauranga, New Plymouth, Wanganui, Hawera and Tokoroa and Northpower covering Whangarei.
Telecom estimated the areas covered by these three parties represents around 12 per cent of the population of New Zealand.
Canadian-based Axia NetMedia Corp missed out, with CFH chairman Simon Allen saying its bid included elements that were not part of the Government's UFB policy.
Telecom shares were halted ahead of the announcement. They fell sharply when trading resumed and were down 13 cents at $2 in early afternoon trading. The plunging share price dragged the New Zealand sharemarket down.
"Telecom is not getting the first cut of the feast," said David Price, adviser at Forsyth Barr.
"They are not out of the room but any negotiating they have to do is with the three parties selected as opposed to CFH."
However, Mr Price said it was not the end of the world and the market had probably over reacted.
"The announcement should be viewed as slightly negative but not to the extent that the stock has fallen today," he said.
Mr Allen said CFH was well on track to make recommendations for binding offers for initial investment partners to shareholding ministers in October and to start the rollout of UFB by the end of the year.
Brokers said yesterday's announcement means that the Government has opted for a regional approach rather than a national approach with Telecom.
Vector is on the shortlist covering the Auckland region.
The other parties on the shortlist of 14 are CityLink covering the Wellington Region; Central Fibre Consortium; Electra covering Levin and Kapiti; Electricity Ashburton covering Ashburton; Enable Networks covering Christchurch and Rangiora; Flute Network covering Dunedin, Invercargill and Queenstown; Network Tasman covering Nelson and Blenheim; Network Waitaki covering Oamaru; and Westpower covering Greymouth. NZPA
Telecom misses out on first cut of broadband 'feast'
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