Telecom New Zealand will a form strategic alliance with Hutchison Telecommunications and merge its Internet portal with US software giant Microsoft as part of an aggressive push into the Australian mobile market.
With ambitions of becoming a leading player in the Australian mobile market, Telecom NZ's deal with local telco Hutchison and its Hong Kong-based parent company Hutchison Whampoa will see the shaping of a new Australian-based company - Hutchison 3G.
AU$1 billion of new equity will be invested in Hutchison 3G that will develop 3G services in Australia.
Telecom NZ will inject AU$250 million in Hutchison 3G for a 19.9 percent stake with a commitment to invest a further AU$150 million in funding in the new company.
AU$600 million to come from Hutichison and/or Hutchison Whampoa.
Hutchison Whampoa has also entered into an option to take a 19.9 percent of the company's New Zealand arm, Telecom 3G, for NZ$250 million.
"This is an exciting development for us. It demonstrates further progress in our mobile strategy for the region and provides relatively low-cost entry to cellular network services in Australia with a partner who has global leadership in 3G," Telecom New Zealand CEO Theresa Gattung said.
"Given the relatively low cost of 3G spectrum licences in Australia and New Zealand, both markets represent attractive opportunities."
Telecom NZ's second announcement this morning was the merger of its Xtra Internet portal with Microsoft's MSN portal in New Zealand.
Microsoft will make a US$300 million investment in the New Zealand telco in the form of convertible notes issued by Telecom NZ, which will have a seven-year maturity and may be converted into ordinary shares.
Telecom NZ's announcements come on the back of an 86 percent jump in net earnings to AU$381 million for the March quarter.
Gattung said Telecom NZ was making solid progress with its transformation as an Australasian group, while also securing the benefits of its highly successful Southern Cross cable project, which links Australia, New Zealand and the United States.
