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Communications Minister David Cunliffe has again delayed his decision on the breaking-up of Telecom but appears to have opened the door to Telecom's preferred option.
Cunliffe said yesterday that the Government had allowed a "window of time" over the next two months to consider options for the voluntary structural separation of Telecom, pushing back the decision.
The final shape of Telecom was originally due to be announced last month but was delayed after the company tabled a counter-proposal to spin off its network assets.
Cunliffe confirmed that his final determination might now come in September, but could be earlier.
"I have met the new Telecom CEO, Paul Reynolds. It was a very useful meeting and I'm confident that his view is the same as mine - that all sides share an interest in seeing these discussions completed quickly."
The Government announced in April plans to split Telecom into three separate business units - retail, wholesale and networks.
Telecom prefers structural separation - hiving off its network assets into a separate company while retaining the retail and wholesale businesses.
Cunliffe said yesterday that the Government would be talking to Telecom primarily about operational separation, but would also discuss options for structural separation.
"It [talks] will be on the basis of the [Telecommunications] Act as it currently exists and the starting point will be the discussion document we issued," said Cunliffe.
"We're also signalling our willingness over the next two months to have a window of time to consider options around voluntary structural separation with the objective of identifying whether there is a value proposition to a form of voluntary structural [separation] that delivers benefits over and above the baseline established by the operational model that's in the discussion document."
Cunliffe's statement marks a softening in the Government's attitude, signalling for the first time it would enter formal discussions with Telecom over structural separation.
However, he reiterated the Government's stance that any talks would not come at the cost of its operational separation plans or the recently amended legislation.
Cunliffe warned that if "an unambiguously better way forward" was not evident within two months, Telecom would face full implementation of the Government's plan.
He said considering Telecom's structural separation proposal would "future-proof" the Government's own operational separation plans.
"While most in the industry have indicated that operational separation should proceed as planned, there was also a significant voice calling for the consideration of a structural separation."
Telecommunications Users Association head Ernie Newman said his organisation supported structural separation, but only once operational separation was in place.
"If you have structural separation, probably 60 per cent or more of the issues that require regulation disappear," he said.
However, Newman was concerned that seven months after the introduction of the Telecommunications Amendment Act the Government had only a first draft of the operational separation on the table.
Telecom spokesman Mark Watts said Cunliffe's statement was positive and the company acknowledged the goodwill that underpinned it.
