New Zealand Telecom Faces Uncertainty

Telecom Corp. of New Zealand faces uncertainty about its future because of a big change in regulatory environment. New Zealand is structurally separating Telecom New Zealand into separate retail and wholesale businesses, which will mean New Zealand Telecom will henceforth be a retail marketer of service, but without ownership of its own facilities.

As in Australia, the issue is whether the new broadband network New Zealand wants to build will substantially involve the wholesale part of Telecom New Zealand or not. If the future wholesale company can substantially participate in building and operating the new network, it has a brighter future. But it remains unclear how big a role regulators might let the former Telecom New Zealand entity play in building and operating the new national broadband network.

'There is still plenty of uncertainty about its involvement in the UFB (ultra fast broadband),' said Craigs Investment Partners broker Belinda Stanley."

NZ Shares End Lower As Fiber Uncertainty Plays On Telecom - WSJ.com (subscription required)