The New Zealand government has reached agreements with Telecom New Zealand and Enable Networks that will complete the roll out of ultra fast broadband (UFB) to 75 percent of New Zealanders by 2019. The government will partner with Enable Networks, which is 100 percent owned by the Christchurch City Council, to build an ultra fast broadband network for Christchurch, Rangiora and surrounding areas. The Telecom deals will see a fibre optic network built in Auckland, the eastern and lower North Island and most of the South Island. As part of the deal, Telecom must split off its network arm, Chorus, into a completely separate company. Chorus will maintain the Kiwishare obligations currently placed on Telecom.
These are the third and fourth partnerships in place for the roll out of the UFB initiative. The government already has partnerships in place with Ultra-fast Broadband and Northpower covering the rest of urban New Zealand. The UFB is complemented by the Rural Broadband Initiative (RBI) which is rolling out much faster broadband to our rural communities.
The communications minister Steven Joyce also said that wholesale household prices will start at NZD 40 or less per month for an entry level product and less than NZD 60 per month for the 100 Mbps product. There are no connection charges for households.
The rollout will start immediately with schools, hospitals and 90 percent of businesses covered by 2015. Telecom New Zealand will connect 299 schools within the first twelve months, with an additional 736 schools connected by 2015. In addition thirty hospitals will be connected within the first twelve months, with a further seven added by the end of 2015. In addition, Chorus intends to engage in partnering discussions with Christchurch City Holdings (CCHL) and its subsidiary Enable, which could result in Chorus taking up to a 50 percent stake in a joint venture in Christchurch and Rangiora.
Telecom said it would now aim to demerge Chorus by the end of the calendar year. The demerger would see Telecom split into two entirely separate companies. Chorus will be a nationwide fixed-line access network infrastructure operator that will offer services to RSPs on an open access basis to allow them to build and deliver innovative services to New Zealand end-users. Sue Sheldon, who is currently a Telecom director and based in Christchurch, has been named as Chairman of Chorus.
Telecom will be a retail-focused telecommunications business comprising fixed, mobile and ICT businesses. It will also provide some other non-regulated services to the industry, such as national backhaul and certain commercial wholesale services. After a demerger Telecom will no longer own local access fixed networks and will build and deliver services to end users using the Chorus network. The agreement is subject to certain conditions, including stakeholder approvals and legislative change. Given that Telecom anticipates demerging Chorus in the FY12 financial year, financial guidance for that financial year has been withdrawn. FY11 financial guidance remains unchanged.
