Telecom New Zealand has agreed to structurally separate into two businesses as part of the price of its appointment to roll out the country’s national Ultra-Fast Broadband (UFB) network.
Chorus, said Telecom NZ, will emerge as a newly listed and independent company by the end of this year.
Paul Reynolds, Telecom NZ CEO said: “We will be laying the first fibre for the Ultra-Fast Broadband initiative from August, while continuing the process to demerge Chorus in parallel.”
The UFB initiative will provide fibre-to-the-premise broadband services at speeds of at least 100 Mbps. Between 2012 and 2015, fibre will first be delivered to the priority customers of Crown Fibre Holdings, the body appointed to oversee the roll-out, including public institutions and businesses. By 2019 fibre should have passed all premises in the 24 regions.
“The wholesale rates mean that barriers to upgrade to a fibre connection have largely been removed as soon as it is available in an area,” claimed Reynolds. “As such, we expect regional service providers will seek to convert their customers to fibre as quickly as possible.”
Chorus also said it is planning discussions with Christchurch City Holdings (CCHL) which could mean Chorus taking up a 50% stake in a joint fibre venture in the Christchurch and Rangiora region.
According to Paul Budde, MD of BuddeComm, Telecom NZ will also face challenges restructuring its business. “On the retail side Telecom NZ will have to compete on an equal level with its competitors, which it is not used to, so that will be an enormous challenge. It will have to reinvent itself and in particular start looking at new business models around wholesale,” said Budde.
