Foreign companies allowed to acquire Telecom’s retail arm

20 Jun 2011

New Zealand’s communications minister Steven Joyce has announced that foreign companies will be permitted to purchase Telecom New Zealand’s retail business when the company de-merges later this year. Under the current rules, foreign firms are not allowed to own more than 49.9% of Telecom, whilst additional government clearance is required for foreign stakes larger than 10%. If the split is approved by shareholders, Telecom’s network branch Chorus will become a separate listed company, retaining the operator’s existing copper network and rolling out and owning the impending fibre-optic network; Chorus will still be liable to meet the existing ownership limitations. Global Telecoms Business reports Joyce as saying: ‘The restrictions will not apply to the retail company in the same way they do not apply to Vodafone or TelstraClear’.

Telecom’s pending structural separation – which is slated to take place before the end of the current calendar year – has been necessitated by Telecom’s selection by government agency Crown Fibre Holdings (CFH) to roll out the bulk of the country’s Ultra Fast Broadband (UFB) initiative. In May 2011 Telecom was awarded contracts covering 24 urban areas (including Auckland and Wellington), effectively bringing the long-running selection process to an end. As part of the agreement Telecom agreed to structurally separate its infrastructure business unit, Chorus, from the rest of the company. Going forward, Chorus will operate as a nationwide fixed line access network operator, offering services on an ‘open access’ basis, whilst ‘Telecom’ will function as a retail-focused telecoms business, comprising fixed, mobile and ICT operations.

New Zealand, Chorus (New Zealand), Spark