Telecom confirms plans to split

Telecom is proposing a structural separation to take part in the rollout of the Government's nationwide fibre network. Photo / Supplied

Telecom has submitted a refined plan for the Government's ultrafast broadband initiative predicated on the separation of its network division and integrating the initiative with the rural broadband initiative.

The company has earlier signalled that it was making a thorough assessment of structural separation in order to participate in the $1.5 billion rollout of a nationwide fibre network, having already undertaken an operational separation.

Today, the company said it had submitted an extensive refined proposal to Crown Fibre Holdings, the details of which are confidential.

Telecom chief executive Paul Reynolds said the proposal was predicated on the structural separation of Telecom, through a demerger into two companies which would give rise to Chorus2 as a new and entirely standalone company.

"This would be a significant event for our company and would radically transform the telecommunications sector in New Zealand," Dr Reynolds said.

A significant structural change to Telecom's business would require 75 per cent of the shares that are voted to vote in favour of the demerger proposal.

"I firmly believe that Telecom, through Chorus, can deliver more fibre, faster and more efficiently than any other partner while avoiding duplication or waste," Reynolds said.

"Our solution brings together the best of both worlds - the economies of scale and consistency of service inherent in a single, national, open access network, and the potential for significant local community involvement."

The proposal was aligned with the interests of Telecom's shareholders, the Government and New Zealanders.

Reynolds said that the development of the refined proposal had been an enormous and intensive piece of work.

"No sacred cows have been spared and no assumptions have been left unchecked as we have worked through this stage of what is a challenging but critically important issue."

Telecom said its bid outlined a wide-ranging solution to make fibre to the home available to 75 per cent of New Zealanders by 2019, with priority users reached by 2015.

Integrating the two initiatives would allow for the extension of the reach of ultrafast broadband into rural areas well beyond the 75 per cent coverage area.

"Telecom has been open, flexible and considered all avenues in detail when developing the refined proposal," Reynolds said.

- NZPA