Telecom NZ and Chorus demerger confirmed by High Court (New Zealand)
The High Court has reportedly given Telecom NZ the go ahead for the demerger of Chorus, to take place on 30 November 2011. According to reports, Telecom NZ has said that it will demerge its Chorus local fixed line infrastructure business, so as to be able to participate in the Government’s Ultra-fast Broadband initiative.
As per sources, Paul Reynolds, CEO, Telecom has said that the receipt of the court orders was the final box to be ticked in the demerger process. He added that they can now confirm that Telecom will complete this extremely complex transaction, which has been delivered in a very tight timeframe, on schedule.
Reports reveal that the Chorus shares will be distributed among eligible Telecom shareholders at a ratio of one Chorus share for every five Telecom shares held.
Vodafone New Zealand signs multi-million dollar contract with Pacific Fibre (New Zealand)
Mobile operator Vodafone New Zealand, a unit of the Vodafone Group PLC has entered into a contract with Aukland based private company Pacific Fibre to supply international bandwidth connecting Sydney (Australia) and Aukland (New Zealand) with Los Angeles (USA). Currently, New Zealand’s connection relies solely on Southern Cross cable allowing the owners Telecom NZ, SingTel Optus and Verizon Business to differentiate prices for retailers. Pacific Fibre aims to provide a solution for the increasing demand for international connectivity by building two subsea cables with a combined length of 12,750 kilometers by 2014.
As per reports, the 10 year multi-million dollar deal will make Vodafone the largest New Zealand customer for Pacific Fibre, who has also signed a deal with the New Zealand government company, Research and Education Advanced Network New Zealand Ltd. (REANNZ).
According to reports, Mark Rushworth, Pacific Fibre CEO says that foundation customers such as Vodafone and REANNZ have championed the cause of ensuring international bandwidth competition. Their commitment will help break the monopoly on capacity pricing into and out of New Zealand by have a direct impact on bringing faster service and better rates to the region.
Telecom NZ to Continue Cost Reduction: CEO
Telecom Corp.’s CEO has stated that the company will continue to cut costs and reduce staff over the next three years as it seeks to improve its bottom line.
As per reports citing Telecom Chief Executive Paul Reynolds, the company’s strategy for the next three years is to improve processes, capital efficiency and cost effectiveness with some changes resulting in job losses.
He added that on apples to apples basis, Telecom will employ fewer people than it does today in 2013.
The executive declined to give specific numbers on how many jobs would be cut. Currently, Telecom’s total work force stands at about 8,500.
But Reynolds added the company is considering bringing some outsourced jobs–about a few hundred–back into the company. Years ago, the company outsourced a lot of IT work and now they are looking at what parts they can do more cost effectively by bringing the work and jobs back into Telecom.
Telecom NZ profit falls in Q3 (New Zealand)
Telecom New Zealand has reported its Quarter results. The company posted a nearly 50% fall in quarter profit, as revenue in key segments and government subsidies shrank. Net earnings fell 49.1% to US$66 million.
According to the company, the bottom line was hit by NZ$16 million worth of regulatory costs, accrued from the removal of its annual Telecommunications Service Obligations (TSO) subsidy for providing services to unprofitable areas, funded via levy through Telecom’s competitors.
The TSO has been replaced by the Telecommunications Development Levy (TDL). While the TDL will also be sourced from rival operators, the fund is expected to average NZ$50 million annually, compared to the NZ$70 million TSO.
Revenue fell 2.9% to NZ$1.32 billion, while EBITDA curved in 0.9% to NZ$443 million. According to Telecom CEO Paul Reynolds, the operator was, like many traditional fixed-line operators, feeling the pressures of the shrinking home phone market. Growth in services such as mobile, broadband and ICT is only partially offsetting declines in traditional fixed line and voice services. However, the rate of fixed access line loss and fixed to mobile substitution remains somewhat less in New Zealand than many overseas countries. Local service revenue fell to NZ$251 million from NZ$261 million in 1Q10.
Telecom NZ signs a Web filtering scheme
Telecom New Zealand has signed up to the government’s new voluntary web filtering scheme.
The filter developed by Sweden’s Netclean Technologies, checks ISP customers’ connection requests against a list of filtered IP addresses. ISPs will not be given a list of sites on the blacklist.
According to the operator, it would implement the filter, an initiative of New Zealand’s Department of Internal Affairs, in the coming weeks.
If a user requests an IP that is on the list, it will be redirected to the department of internal affairs’ servers and checked against a list of known offending URLs, and blocked if a match is found.
The department claims that this method causes no degradation of internet performance.
The filter was first made available to ISPs in March. The system is voluntary for ISPs to implement, and focuses exclusively on blocking child sexual abuse material.
This puts it in contrast with the controversial system proposed in Australia, which would be mandatory and block material refused classification by the nation’s classification board.
Telecom New Zealand agrees for ‘voluntary’ structural separation
www.WirelessFederation.com/news: A structural separation of the Telecom New Zealand wholesale and retail divisions has been suggested by the company’s CEO Paul Reynolds in order for Telecom NZ to be able to take part in the UFB tender process. UFB plan was suggested by the New Zealand government in early 2009 with a fund of NZD 1.5 billion to build broadband in the country. The aim of the plan was to connect 75 percent of homes in 25 cities to fibre within six years.
In March 2009, the plan was further developed with the establishment of the Crown Fibre Investment Company (CFIC), which is looking for co-investors in the 25 Local Fibre Companies (LFC) project. Wholesale only (no ISP role) and open access for service providers were the principles of the network. In September 2009, more elaborations to the plan came on board, as well as some delays.
Just like Telstra in Australia, Telecom New Zealand has been placed in a tough spot with the government plan: to participate or compete? Telecom NZ has ‘voluntarily’ suggested a possible structural separation as the government has set an inflexible demand of ‘wholesale only’. This arrangement has raised a major question that whether retail should be separated from the wholesale and network, or whether the network Chorus should be sold off.
Telecom NZ has been put into a difficult situation by the government as the cost and risks are considerably high and companies lose the existing synergies from vertical integration. However, among all these things, the benefits of structural separation have been ignored. With the removal of the market inequality, the incumbent is no longer the only one to enjoy the advantages of vertical integration and cross-subsidization. Secondly, it is difficult to compete with your customer and that is exactly what is going on between the retail and wholesale division.
Alca-Lu reflects damage control mode after NZ network failures
www.WirelessFederation.com/news: The repeated outages at the HSPA network supplied by Alcatel-Lucent to Telecom NZ have made the former go into a damage control mode. CEO of Alca- Lu, Ben Verwaayen went onto the airwaves to defend the company, but failed to explain the failures.
Verwaayen attributed the initial network problem to a serious hardware failure caused by traffic surges resulting from users trying to get back on the network which subsequently overloaded the system.
According to Paul Budde from Australian-based research firm Paul Budde Communications, the situation was getting very serious for Telecom New Zealand, damaging its credibility which in turn could weaken its chance of winning the next stage of the country’s fiber roll out project.
Telecom NZ’s EBITDA rises almost 2%
www.WirelessFederation.com/news: Telecom New Zealand’s EBITDA increased almost 2 percent year-on-year and revenues and net earnings slide in the second quarter ended December 31. With 1.7 percent increase, EBITDA rose to NZD 425 million from NZD 418 million.
However, the company suffered 6.5 percent decline in the revenues sliding to NZD 1.32 billion from NZD 1.41 billion in the year-ago quarter.
Telecom ended the quarter with 467,000 customers for its XT mobile network and by attracting 60,000 new mobile customers in the three-month period, the company ended the quarter with a total of 2.310 million mobile customers. Telecom Retail attracted 64 percent of the new customers during the quarter and held its market share at 57 percent.
Telecom NZ’s XT network to be reviewed
www.WirelessFederation.com/news: Telecom New Zealand will commission an independent review of the XT network due to its outage. Besides, the company has also started the work on improving capacity and design of the network.
Lower South Island is the most affected sites by the outage followed by disruptions in December. Customers significantly affected by the problems have been offered compensation by the company.
Fibre proposals submitted by Telecom NZ
www.WirelessFederation.com/news: A response to the invitation from the government to participate in providing ultra-fast broadband will be submitted by Telecom New Zealand. As per the response, a fully compliant preferred commercial model proposal, and an alternative commercial model proposal will be provided by the Telecom.
The focus of the alternative proposal is on delivering a national network using Telecom’s fibre-to-the-node (FTTN) programme as a springboard for the government’s vision of fibre-to-the-home (FTTH).
The company is also open to discussing other alternative proposals in addition to the above two.
