Telecom gets nod for New Zealand broadband

Under the deal, Telecom would split its retail and network arms into separate companies to ensure smaller telecommunications players could compete, Communications Minister Stephen Joyce said.

The long-awaited announcement, which the government said delivered on a 2008 election pledge, sent Telecom shares soaring 6.6 percent to NZ$2.43 in early trade.

Joyce said the deal completed contract awards for the broadband network and its construction would begin immediately, reaching 75 percent of New Zealanders by 2019.

"Ultra fast broadband is a key part of the government’s economic growth plan," he said. "Broadband speeds of 100 Mbps and more will revolutionise the way many businesses operate."

Telecom said its contract represented about 70 percent of the planned network's total coverage.

It said the company's existing network arm, Chorus, would become a separately listed company by the end of 2011, concentrating on building the network and supplying wholesale broadband to other companies that sell their services direct to the public.

Telecom would continue as a retail-focused business, selling fixed-line, mobile and broadband services to the public, the company said.

The government also announced Tuesday that it had awarded Enable Networks, which is owned by the Christchurch City Council, the contract to supply broadband to New Zealand's second largest city.

Northpower Ltd. and WEL Network have previously been given contracts for other areas of the country.

A spokeswoman for Joyce said the project's total budget was NZ$3 billion, with the cost split evenly between the government and telecommunications companies.

(c) 2011 AFP