New Zealand's Telecom Eyes Structural Separation for High-Speed Broadband

Telecom Corp, New Zealand's biggest phone company, said it's considering splitting its network and retail assets into separate companies so it can participate in the nation's high-speed broadband network.

The government's proposed NZ$1.5 billion ($1 billion) investment in a fiber-optic network will "fundamentally change" the industry and Telecom needs to consider separating the assets to take part, Chief Executive Officer Paul Reynolds said. Telecom separated the operation of its networks and retail arm in 2008, two years after being instructed to do so by the former government. At the time, it opposed splitting them into separate companies, saying the structure now required for phone carriers wanting to participate in the new network would be too costly. Creating a separate network company is "kind of the nuclear solution that solves a whole bunch of issues all at once from a regulatory standpoint, but from a shareholder standpoint it may not be the right approach at all," said Paul Robertshawe, who helps oversee $2.4 billion at Tower Asset Management Ltd. in Wellington. "I hope they are considering more than this option."