KEY POINTS:
As the Commerce Commission investigates competition problems in the mobile phone industry, a would-be entrant says it has the money to establish the long awaited third network.
NZ Communications, previously Econet Wireless New Zealand, said it had signed a major contract with Chinese telecommunications supplier Huawei to build
a national cellular network.
Signing of the contract followed capital investment from international private equity funds Hong Kong-based GEMS (General Enterprise Management) and CVP (Communication Venture Partners) of London.
NZ Communications chairman Bill Osborne would not say today how much investment was coming from the equity funds, although he acknowledged it was over $100 million.
As Econet, the company was established in New Zealand in 2000 and since then has raised concerns about the regulatory environment in the mobile industry.
So far it has failed to establish the planned new cellphone service, but Mr Osborne said the company now intended to spend the next 18 months building infrastructure.
That would first happen in the main centres, and depending on the extent of the hurdles to be overcome, would spread out into provincial areas, he said.
As that plan swings into action, the Commerce Commission continues to examine the reasons why only two mobile network operators, Telecom and Vodafone, have become established.
The process involves looking at whether changes should be made to the rules covering co-location and roaming.
Roaming allows mobile phone users to make or receive calls on other service providers' cellular networks when outside the coverage area of their own service provider's network.
The commission noted that roaming availability was critical to a new entrant's business case.
Cellular phone users wanted certainty they would be able to use their mobile phones wherever they were.
Co-location enables providers to put radio transmission and reception equipment at sites controlled by other providers.
The commission said co-location could reduce the costs associated with setting up cell sites and associated infrastructure for a mobile network, and could reduce the visual impact of cell sites.
NZ Communications would co-locate wherever it could, Mr Osborne said.
Roaming would be important to achieve the nationwide coverage needed before a new provider could get a significant market uptake.
Under the current rules, a new provider needed to cover 10 per cent of the population with its own network to be able to negotiate roaming arrangements with incumbent providers.
NZ Communication's plans for its own network exceeded that minimum, and it would be negotiating roaming arrangements with the incumbents, Mr Osborne said.
As all the constraints in building the network had yet to be identified, he could not say when the first services would be offered.
He also would not give details about the new shareholding arrangements for the company, following the private equity investment.
Econet retained a "core" shareholding but its percentage of ownership had reduced from a level toward 70 per cent to make room for the private equity investment.
The Hautaki Trust, of which Mr Osborne is also chairman, had diluted its shareholding from 30 per cent, Mr Osborne said.
But Maori had an option to increase their shareholding, not back to 30 per cent, but to a "significant" level.
Hautaki would increase that shareholding how it saw fit, and that would happen in next few months, he said.
There was no intention for now to take the company public.
The pan-Maori Hautaki Trust was set up to administer Maori telecommunications spectrum assets, with the Government reserving a block of spectrum for it.
- NZPA
