Telecom NZ promises demerger for fibre

Telecom New Zealand has today submitted an extensive proposal to Crown Fibre holdings, laying out an action plan for its inclusion in the building of New Zealand's National Broadband Network, the Ultra-Fast Broadband Initiative.

Telecom's proposal aims to roll out fast broadband to 75 per cent of New Zealanders by 2019, with "priority users" to get connected by 2015.

The proposal relies on the structural separation of the telco, involving a demerger into two companies: Telecom NZ and Chorus2.

The company is already operationally split into wholesale, retail and network arms, but splitting into two separate companies would be a step further.

In order for the company to separate in such a way, 75 per cent of shareholders would have to agree to the proposal.

"I firmly believe that Telecom, through Chorus, can deliver more fibre, faster and more efficiently than any other partner while avoiding duplication or waste," Telecom NZ CEO Paul Reynolds said in a statement.

"Our solution brings together the best of both worlds — the economies of scale and consistency of service inherent in a single, national, open-access network, and the potential for significant community involvement."

Reynolds believed Telecom's role was critical in making sure the planned NZ network succeeded.

He said that Telecom NZ's most experienced people had worked on the proposal. "No sacred cows have been spared and no assumptions have been left unchecked as we have worked through this stage of what is a challenging but critically important issue," he said.

The telco also proposed integrating the Ultra-Fast Broadband Initiative with the Rural Broadband Initiative, which plans to service those areas outside the 75 per cent footprint. It said this would allow the reach of the ultra-fast broadband to be expanded beyond the 75 per cent coverage area.

Now the telco would discuss the proposal with government bodies, Reynolds said.