Contractors' numbers likely to shrink

By ADAM GIFFORD

A shake-up in Telecom's field service strategy could affect the fortunes of some big contracting companies.

Telecom's 34 network services maintenance patch contracts are shared among Alstom, Cabletalk, GDC Communications and Downer, which bought Telecom's ConnecTel maintenance business.

It has contracts with other firms for services outside the patch contracts.

Network delivery general manager Steve Fuller said Telecom wanted to consolidate the number of service contracts.

"We have issued a request for tender to our major field service companies and we'll be negotiating that with them over the next few months and helping them through the changes," Fuller said.

A decision will be made by December, and was likely to involve a cut in the number of providers and fewer, larger patches.

GDC, which has seven patch contracts, said it would seek to maintain and extend its business with Telecom. "This is an opportunity and a threat," said managing director Geoff Lawrie.

"Patch contracts always had an expiry date.

"Telecom is now saying that when it comes to the renewal process, it has ideas on how to construct them differently."

Lawrie said the patch contracts did not have high margins for the service providers, so the exercise was about more than cost reduction.

It is an area that rewards scale.

Fuller said the contracts needed to better reflect Telecom's integrated services and products.