Gen-i confident future is bright after Telecom split

Telecom's information technology arm Gen-i says it will make strong gains in a fibre-optic future, despite the dark clouds looming over the rest of the telco industry.

Gen-i, with Telecom retail, is set to split from the group's network branch by the end of the year after Telecom Group won the bulk of the Government's ultra-fast broadband contracts.

Network owner Chorus will then be responsible for the roll-out and management of fibre internet cables across 70 per cent of New Zealand and Gen-i will continue to sell mobile, voice, data and IT services to larger business customers.

Analysts say this split will fundamentally change the face of telecommunications in New Zealand and that Telecom's standalone retail division may struggle in the industry shake-up.

IDC's Rosalie Nelson said last month that revenues were likely to grow by only 0.27 per cent each year between now and 2015.

But Gen-i chief executive Chris Quin said the IT space was tipped for a far brighter future.

"[Analysts] are pretty clear that growth rates in IT services are quite a bit bigger than telco. The general word that IDC would put out is that the telco market is going to be flat or slow within most economies over the next period of time. But they do talk about the [compound annual growth rates] in IT being from 4 to 5 to 6 [per cent] depending on what country you're talking about."

Quin said there were plenty of opportunities for ubiquitous fibre to change how businesses operate.

"There's no doubt that fibre [internet] is going to be built, it's going to happen. The real question that's been here all along is how a return will be gathered from that building of fibre and what is the most likely way that it is going to show up."

Quin said fibre would allow businesses to access services through cloud computing that they could not afford to buy outright on their own.

"They're going to be able to network their business like they haven't been able to before- that might mean they spend more on IT but less on other things, so it will improve the economics of their business," Quin said.

Moreover, fibre internet would allow more video conferencing and allow companies to be more "agile, faster and more Australasian".