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Lots of news today, but still not enough. A more definitive analysis is to be provided on August 4th.

Telecom said today the Government had not strong-armed it into making today's decision to split the business and allow more competition.

"This is a significant change and we were already starting to move in this direction," chief executive Theresa Gattung told journalists today.
Telecom accepted the Government wanted changes in the telecommunications industry and was "getting on with it", she said.

The company will split its retail and wholesale businesses, putting its own retail unit on the same level as other competitors.

Australian telco analyst Paul Budde said the move was an "enormous boost for the New Zealand economy", and he believed Telecom was headed in the right direction.

Asked whether the Government would be placated by the move, chairman Wayne Boyd said the company was "reading the tea leaves".

To rumours that Ms Gattung's job was under threat, he said she had the board's full backing for the move.

"It is a significant strategy, it is transformational and she has our full support."
Ms Gattung defended the order of events, saying Telecom had presented its wholesale "charter" to the Telecommunications Commissioner last November and Telecommunication Minister David Cunliffe last December.

It had started talking to its wholesale customers in February, and announced the charter in April, "all ahead of May".

However, firm plans for the split had not begun until the Government announced six weeks ago that it would regulate Telecom into open up its "copper wire" network to rivals.

Ms Gattung said it was Telecom's intention to hold 100 per cent of its wholesale operation – the infrastructure Telecom owns – because it would become a significant earner.

Details about how the move could impact profitability were unavailable, but guidance on the outlook for next year and capital management would be released at Telecom's AGM on August 4.

Although a similar move in Britain had seen an immediate increase in broadband uptake and is likely to mean lower prices for consumers, uncertainty about Telecom's future is set to continue.


http://www.stuff.co.nz/stuff/0,2106,3714202a13,00.html

And here is more commentary from down under:

The New Zealand sharemarket ended positively today, but the mood did not spill over for top stock Telecom, which announced moves to face a more competitive industry head-on.

The top 50 index closed up 25.55 points or 0.7 per cent to 3613.41. The NZX all capital index rose 6.1 points to 1034.71. Telecom touched a fresh year low of $4.05 – its lowest level in nearly 13 years, but ended the day down a cent at 409.

Some $76m worth of Telecom changed hands, out of a total turnover of $119m.

Telecom's plans involve splitting its retail and wholesale business, putting its retail arm on the same footing as its rivals.

The stock has fallen more than 20 per cent since the Government announced six weeks ago that it would regulate Telecom to open up its network to facilitate cheaper broadband services.

Analysts said the move might be good for the country but did nothing to clear uncertainty about Telecom's fortunes. The company said it would reveal more at its AGM on August 4.

"The market needs more details," said Direct Broking's Peter Lynds. "Hopefully it will get the Government off its back."


http://www.stuff.co.nz/stuff/0,2106,3714203a6020,00.html

David
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