Telecom still cool on split

Telecom's options 'confidential', says Paul Reynolds

Telecom chief executive Paul Reynolds has doused growing speculation that the company has warmed to the idea of splitting into two separately owned businesses to get a piece of the action from the government's $1.5 billion ultrafast broadband initiative.

Reynolds said there had been no change in the company's stance on structural separation, which was a "costly and complex exercise" that had not stacked up elsewhere.

"Telecom and the board's position has been pretty consistent."

Telecom is due to respond tomorrow to the government's broadband proposal, which would see fibre-optic cable laid to three-quarters of homes. The government is seeking private sector partners to build the network and connect customers, but has said companies that own a retail business, such as Telecom, would not be able to become a majority owner of any public-private ventures.

Reynolds said Telecom believed it could put forward a very attractive proposition and was open to alternative commercial models that could get the job done quickly and well, but structural separation was time-consuming and unproven.

"We think there are many ways of doing this well. What is our first choice, second or third choice is confidential."

Any signal from Telecom that it might be willing to cleanly split its retail and network businesses would be greeted with relief by the government, according to one source. He believed the company's board had "read the political tea leaves" and concluded separation might not be such a bad outcome.

Splitting Telecom would make it easier for companies bidding to lay fibre to piggy-back on Telecom's existing network.

Labour communications spokeswoman Clare Curran had also heard separation was on the table.

While not opposed in principle, she was concerned that could trigger cost-cutting and massive job losses within Telecom's Retail arm, with hundreds of jobs being outsourced to India, and said the government had taken a "Mexican standoff"' approach.