Telecom demerger formally on the table in new UFB bid

By Paul McBeth

Aug. 2 (BusinessDesk) – Telecom Corp. has officially put itself on the carving block in its latest bid to tap government funds to roll-out high speed internet through the nation.

The bid relies on the structural separation of Telecom into two units that would carve network business Chorus out as a standalone company. The de-merger proposal will need at least 75% of shareholders to give it the nod of approval.

“No sacred cows have been spared and no assumptions have been left unchecked as we have worked through this stage of what is a challenging but critically important issue,” said chief executive Paul Reynolds in a statement. “We have also proposed integrating the Ultra-fast Broadband initiative with the Rural Broadband Initiative. Integrating the two initiatives would allow for the extension of the reach of Ultra-fast Broadband into rural areas well beyond the 75% coverage area.”

Reynolds hinted at a demerger on the company’s investor day in May, saying that was one way Telecom could participate in the government’s $1.35 billion plan without diluting shareholders’ value. For that to go ahead, the phone company would need significant relief from the regulation of its high-speed copper services.

The shares climbed 1.5% to $2.02 in trading today.

(BusinessDesk)

BUDGET 2012:
Parliament Debate Live - Video Of Budget 2011
Keith Ng Interactive Graphic: How the Budget Breaks Down
BUDGET 2012 - FULL COVERAGE: Reports / Analysis - Press Kit - Reaction (from everybody) - Previews (from everybody) - Pre-Budget Announcements

Gordon Campbell: On the Budget’s Spreadsheet Victories

It wasn’t as if expectations were sky high, exactly. Chances are, it was always more likely that we’d be seeing Bigfoot rampage through the Beehive lock-up than catch a glimpse of a credible growth agenda from this government. More >>

Sludge Budget Report - Short The Dollar! MEMO: To international bankers FROM: C.D. Sludge Please short the dollar! It'll be good for both you and us. And you know you want to. Greexit, Eurogeddon... watch out... flight to quality and all that. Follow your instincts. The NZ Debt Management Office has been so surprised at the unprecedentedly low interest rates that it can borrow at that it has already entirely pre-funded the 2013 fiscal deficit - all $8 billion of it! More >>

Pattrick Smellie Comment: Doddling along the best we can hope forCriticising Budgets for lacking vision or imagination is like shooting fish in a barrel, but even so, this year's Budget again feels like a missed opportunity. Perhaps it's the intrusion of real world needs that means the government couldn't make better political use of the $558.8 million it expects to gather in its first partial asset sale. More >>