Telecom hit by unbundling plan

4 May 2006

A ruling by the New Zealand government which will force Telecom NZ to open its broadband infrastructure to competitors has knocked NZD1 billion off the company’s value. Telecom’s share price fell 9% following the news that regulators want it to offer unbundled local loop connections to rival operators and may also require the firm to split its retail business from its network operations. Financial analysts told Reuters: “Investors … do not generally like regulatory uncertainty and the New Zealand government expressly rejected ULL just two years ago. Limited detail means that we believe Telecom’s earnings are now more uncertain.” Telecom is due to release its latest quarterly financial results tomorrow, with expectations that profit will be down by about 13%.

New Zealand, Spark