New Zealand Telecom could be split into three

November 28, 2006

The Parliamentary Finance and Expenditure Select Committee has today released the amendments it made to the Telecommunications Act of 2001. The regulation will most likely cause Telecom New Zealand to be split into three, one for each division. They will report to parliament in a weeks time.

The three divisions will cover a fixed network access services unit, a wholesale business and the retail side of Telecom. All these divisions will still be run dependently by Telecom New Zealand under a fixed directors board. If Telecom cannot split itself then it will be penalised NZ$10 million, unless they have a good reason.

Telecom New Zealand has said that the carving up of their company is "Not ideal..."

Wayne Boyd, chairman of Telecom, said: "We made it clear that we preferred a simpler form of operational separation which we believed was better suited to New Zealand. This form of separation is more complicated and costly than we believe is necessary for New Zealand but we will work to implement it as swiftly as reasonably possible. With the reorganisation Telecom has been working on since early this year, Telecom has already made progress..."

The government has welcomed the changes. "The committee's proposed amendments have been made public... The government will consider the recommendations before deciding on the next step in the progress of this bill," David Cunliffe, minister of communications and minister of information technology, said.

The regulation is harsher than what Mr Cunliffe had originally planned for in his draft bill introduced into parliament on June 29.

Part of the new bill is expected to cover unbundling of the local loop which was announced on May 3, 2006. The local loop is currently owned and operated under Telecom, New Zealand's telecommunications monopoly company.

The new amendments will enable the government to deliver "faster, better broadband Internet access."

The splitting of Telecom is similar to what happened to the British Telecom.