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Telecommunication sector sees activity as NZ govt. to shortlist bidders for its Ultra Fast Broadband Scheme


The New Zealand government has tasked Crown Fibre Holdings to shortlist bidders that will take part in its high-speed broadband network investment tendering.  In the coming weeks, many bidders will be expected to participate in the government backed roll-out of a high-speed broadband network and most will be knocked out. Closed door negotiations are currently underway as companies lobby the government entity, Crown Holdings, charged with the short listing.

 

Big names in the telecommunications industry in NZ are thought to be amongst companies cajoling and sweet talking Crown Holdings for this investment deal. Recently, the long hurled around rumors over Telecom’s interest in the project were confirmed when the company admitted that it is prepared to separate its network business for it to participate in the government backed ultra-fast broadband scheme (UFB).

 

In the governments plan, the high speed fibre network is expected to create a monopoly and the government has stipulated any company that has a retail arm, like Telecom, Vodafone and TelstraClear, cannot take a controlling stake in the new network.

 

Telecom is thought to have sourced the services of the Sydney based corporate advisory company, Goldman Sachs JB Were, over this investment deal. The company CEO, Mr. Werbeloff previously dealt with the acquisition of Yellow Pages that netted Telecom revenues of up to $2.2 billion at the peak of the private equity boom. Chorus (Telecom’s network business) CEO, Mr. Mark Ratcliffe, said that a demerger of the phone giant into a telecommunications service retailer and a network business was the most probable form of separation and would see shareholders holding two Telecom shares receive a single share in each of the company’s businesses at the time of the split.

 

The company said that having to compete against the government would not be a good situation because consumers would not be getting an over build of an existing network and having the government as the business’ major competitor is not good.

 

Additionally, Ratcliffe said that, as long as it was in the best interests of Telecom shareholders, the company would do the right thing. Regardless, he was clear that the expected split of Telecom, if it should happen, would not involve the government buying back network assets. He said that nothing the company had heard from the government involved it buying back assets as it would appear inconsistent with their philosophy. The government, according to Ratcliffe, wants to make an investment in something but shouldn’t be thought of as if it was buying assets back.

 

June 8, 2010.

 

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