Telecom NZ to finalise structural separation on 30 November

Stuart Corner
Friday, 11 November 2011 14:19

IT Industry - Listed Tech

The long planned structural separation of Telecom New Zealand that will see the operator of its access network hived off as a separately listed company, Chorus, has passed its last hurdle and will be completed on 30 November.

Telecom NZ said today, 11 November, that it had received the final orders from the High Court enabling the demerger of Chorus to proceed as planned on 30 November. The structural separation was set in train to enable Telecom NZ to participate in the Government's Ultra-fast Broadband initiative, the equivalent of Australia's NBN, that aims to deliver fibre to 75 percent of New Zealand homes by 2020.

The strategy looks set to be highly successful. Telecom NZ, already the largest telco in the country, is now free to use the new UFB to compete unfettered by Telecom- specific regulation for customers; and Chorus was free to bid for UFB network rollout and operation contracts.

The NZ Government divided the country into 33 regions for UFB rolllout and created a government-owned company - Crown Fibre Holdings - to call tenders for each region and to form joint ventures with the chosen bidders to rollout and operate the network in each region. Chorus won multiple regions representing around 70 percent of the planned UFB coverage including Auckland and Wellington.

Shares in the new company, Chorus will be allocated to existing Telecom shareholders on the basis of one Chorus share for each Telecom NZ share held. Only those Telecom shares bought on or before 22 November on the NZXS or on or before 18 November on the ASX will be eligible to receive Chorus shares. Normal trading in Chorus shares will start on 25 November on the NZXS and on 1 December on the ASX.

Chorus was  set up initially as a functionally separate business in January 2008 as part of legislated operational separation that required Telecom to create a separate unit to own and operate its fixed access network, a wholesale arm to provide wholesale services on this network on on-discriminatory basis to all access seekers, and a retail unit. It was also required to create an independent oversight body to ensure that the intent of operational separation was achieved.