Telecom New Zealand plans demerger to join government’s broadband initiative

New Zealand's largest telecommunications provider Telecom has announced plans for splitting its business into two companies in order to participate in the government's ultra-fast broadband (UFB) initiative to deliver a national fibre to the home network.

Telecom has submitted a refined proposal confirming its commitment to Crown Fibre Holdings (CFH), the state-owned company managing the $1.5-billion scheme, Telecom said in a statement.

The bid outlines Telecom's wide-ranging solution to meet the vision of fibre to the home available to 75 per cent of New Zealanders by 2019, with priority users reached by 2015.

UFB is defined as a fibre-to-the-premise (FTTP) broadband service providing downlink speeds of at least 100 Mbps and uplink speeds of at least 50 mbps.

CEO of the company Paul Reynolds said, ''Telecom has a critical role to play in ensuring the fibre vision is a success.''

''Our proposal is predicated on the structural separation of Telecom, through a demerger into two companies which would give rise to Chorus2 as a new and entirely stand-alone company,'' Reynolds further said.

Telecom said that in the refined proposal it has developed a detailed roadmap of the steps necessary for a demerger to occur and also proposed integrating the UFB initiative with the rural broadband initiative which would extend well beyond the 75 per cent coverage area.