Chorus 2 CEO-elect Mark Ratcliffe will not sit on the new company’s board, it has been disclosed today.
Telecom has provided more details about the proposed Chorus demerger, ahead of a shareholder vote that is necesssary to ensure the structural separation of the telco. As part of those details, board members for the proposed Chorus 2 have been announced, and a Telecom spokesperson has confirmed Ratcliffe will not sit on the board.
In addition to Sue Sheldon – whose appointment was announced when Telecom was first awarded the UFB contract – non-executive board members (with a very brief bio) are:
Anne Urlwin – chair of Lakes Environmental and Naylor Love Enterprises, director of Meridian and New Zealand Cricket.
Clayton Wakefield – former ASB head of technology and operations, director of Endace.
Jon Hartley – deputy chair of ASB, director of Mighty River Power
Keith Turner - chair of Fisher and Paykel Appliances, deputy chair of Auckland International Airport, director of Spark Infrastructure.
Prue Flacks – director Mighty River Power, director of BNZ, trustee of Victoria University Foundation.
Meanwhile, another member of the New Chorus executive team has been named – Victoria Crone will become general manager for sales and marketing.
Telecom expects to release a scheme booklet constaining more information about the demerger to its shareholders in mid- September and, should shareholders agree, the demerger will be completed by November 30.
This is how the documents describe what the two new companies will look like:
New Telecom will be New Zealand's largest provider of telecommunications and IT services, by revenue, customers and assets. New Telecom’s assets will include the PSTN network equipment for fixed line calling, the XT 3G mobile network, national backhaul networks, a 50 percent ownership interest in the Southern Cross international cable, and an extensive Australian fixed IP network.
To the year ended June 30, 2011, New Telecom earned adjusted pro forma EBITDA of $1,125 million.
New Chorus will be New Zealand's largest telecommunications utility business and will be a nationwide owner and operator of fixed line access network infrastructure with an approximate 93 percent market share of the fixed line access market. New Chorus’ main assets will comprise local telephone exchanges, roadside cabinets and approximately 1.8 million lines connecting New Zealand homes and businesses.
To the year ended June 30, 2011, New Chorus earned adjusted pro forma EBITDA of $676 million.
If the demerger goes ahead Telecom will apportion its existing debt as follows:
"Upon demerger New Chorus is expected to have approximately NZ$1,700 million of net interest bearing debt (inclusive of associated derivatives) and New Telecom is expected to have approximately NZ$750 million to NZ$950 million of net interest bearing debt (inclusive of associated derivatives)."
Credit ratings for new companies are outlined as:
"Standard & Poor’s believes that if New Telecom maintains an appropriately conservative capital structure and financial policies, a rating outcome of A- is possible and Moody’s is expected to assign a preliminary credit rating of A3 / Stable.
"It is expected that Standard & Poor's will assign a preliminary credit rating for New Chorus of BBB / Stable and Moody’s is expected to assign a preliminary credit rating of Baa2 / Stable."
UFB Network build costs
Telecom estimates the total cost so deploy fibre to 70 percent of UFB is NZ$1,400 million – NZ$1,600 million over the period of the UFB Network rollout to 31 December 2019.
Crown Fibre Holdings investment is NZ$929 million and "it is estimated that New Chorus would have to fund in the range of NZ$470 million – NZ$670 million for the communal fibre access network over the same period."
"In addition, Telecom management estimates that the average cost to connect a premise to the communal fibre access network over the UFB Network rollout period will be in the range of NZ$900 – NZ$1,100 per premise in real terms."
The full document can be found here.