WELLINGTON, New Zealand: New Zealand Communications Minister David Cunliffe said Monday the government has approved a proposal by Telecom Corp. to split its operations into three separate units as part of regulatory moves to break up the company’s monopoly.

“In accordance with the Telecommunications Act 2001, I have decided to approve the plan which is legally enforceable,” Cunliffe said in a statement.

“This is a highly significant step for the telecommunications market, and I’m pleased to announce the successful implementation of the operational separation today — 31 March, 2008,” he said.

The 180-pages of legally binding undertakings will ensure a “level playing field, more choices and lower prices,” he said.

In a separate statement Telecom Chief Executive Paul Reynolds said milestones set by regulators are “challenging but achievable.”

Separation of Telecom into wholesale, retail and network units — along with government regulation to open its copper local loop network to rivals — is designed to foster competition, particularly in high-speed Internet services.

A former state owned monopoly, the company is New Zealand’s biggest fixed-line telephone company by revenue and subscribers. It accounts for around 80 percent of the country’s NZ$8 billion telecommunications market.

The competition watchdog Commerce Commission is responsible for ensuring effective implementation of the approved business split and Cunliffe said the process will be rigorous.

Nigel Scott, adviser at ABN AMRO Craigs, said investors will take a wait-and-see approach with Telecom, while the company remains on the radar for its yield the market will continue to monitor its earnings,” he said.

“It’s a long term story, there’s still a lot to do for Telecom and the market will be watching to see how the company copes with the situation,” he said.

The stock was trading down 0.8 percent at NZ$3.80 at 2300 GMT, after the government announcement.
http://www.iht.com/articles/ap/2008/03/30/business/AS-FIN-COM-New-Zealand-Telecom-Split.php