Powerlynk Candidate proposes Vector restructuring

Media Release

Powerlynk – Auckland Energy Consumer Trust

For immediate release

Tuesday 22 September 2009

Powerlynk Candidate proposes Vector restructuring

A candidate for the Auckland Energy Consumer Trust elections says the power lines company Vector should be restructured to make the most of the government's $1.5 billion ultra-fast broadband initiative.

David Hay, who is standing for the Powerlynk team says there needs to be a clear separation between parent company Vector and its broadband subsidiary Vector Communications Ltd.

“The government wants fast, reliable broadband soon. This is a great opportunity for Vector to deliver long-term value to its shareholders, but the company needs to make some significant changes to win the confidence of regulators, the Minister and the government's new Crown Fibre Company” said Mr Hay.

The first move should be to make a transparent distinction between Vector Communications and its parent company.

“The operational activities, balance sheet and accounts Vector Communications ought to be clearly separated from those of the parent company. Otherwise the government's new Crown Fibre Company might be wary in its dealings with Vector – they certainly won't want a repeat of the problems they've experienced with telecommunications sector, over many years, of strategic game-playing and lack of transparency” said Mr Hay.

Vector also needs to appoint independent directors, with specialist expertise in the broadband market, to the board of Vector Communications.

“The business of supplying infrastructure is very similar for both electricity and broadband, but the demand-side is very different in the broadband market, where there are competing technologies including ADSL and wireless. Vector Communications needs to be governed by directors with a deep understanding the sector and the strategies for long-term success” said Mr Hay.

The Auckland Energy Consumer Trust owns 75.1% of the shares in Vector, which provides electricity to the homes of many Aucklanders and also owns the fibre-optic broadband company Vector Communications.

“I, and the other members of the Powerlynk team, expect Vector to be at the forefront of broadband development in New Zealand. Vector already owns an extensive network of the ducts, channels and pathways needed for fibre optic cabling, so it is well placed to be a major player in the government's initiative. High-speed broadband will provide a reliable stream of dividends for decades to come.”

“I am surprised that Vector hasn't taken a more proactive stance. It's certainly time for some fresh thinking and new faces on the Auckland Energy Consumer Trust” said Mr Hay.

ENDS

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