Telecom asset split approved

Commerce Commission to oversee assets shared between New Telecom and New Chorus

Telecom has taken a step closer to structural separation with ICT Minister Steven Joyce approving the telco’s plan to split its assets between ‘New Chorus’ and ‘New Telecom’.

Telecom undertook to structurally separate – pending the approval of its shareholders – in order to take part in the Ultra Fast Broadband initiative. It released an Asset Allocation Plan (AAP) last month, which showed how those assets will be split following the demerger. This plan has been approved by Joyce with no changes. However, some assets will be shared between the two companies under commercial arrangements that will be subject to oversight by the Commerce Commission. ICT Minister Steven Joyce said in a statement today that he consulted with Telecommunications Commissioner Ross Patterson over the draft plan, and has been assured that it meets the requirements of the Telecommunications Act. “The Commerce Commission will closely monitor and enforce the sharing arrangements that are outlined in the plan. This involves ensuring that the arrangements are on arm’s length terms, unlikely to harm competition, and will protect confidential customer and commercial information.” Joyce says the approval of the AAP “kick starts the most significant telecommunications industry change in the past 20 years. “Should Telecom’s shareholders vote in favour of the demerger, Telecom will be the first telecommunications company of its size to undergo voluntary structural separation,” he says.

A Telecom spokesperson says the demerger is on track to be completed by the end of the year, but he wouldn’t say when shareholders are likely to receive information on the proposed structural separation.

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