Business Editor for the NZ Herald

Telecom moves before UFB call

Paul Reynolds, Telecom chief executive. Photo / Dean Purcell
Paul Reynolds, Telecom chief executive. Photo / Dean Purcell

Telecom announced key organisational changes yesterday in anticipation of an announcement on ultra-fast broadband contracts.

The company said the changes were "to prepare Telecom for a fibre world", which would go ahead whether or not it won the tender.

Telecom's share price reacted positively to the news, up 4.3 per cent to $2.065 at the close of trading.

The company is bidding to lay fibre internet cables in 25 of the 33 regions that will have access to the broadband network.

However, spokesman Mark Watts said Telecom was not waiting around to see if it was chosen as a broadband partner and was proceeding to streamline the company.

The shakeup will see the team serving immediately under chief executive Paul Reynolds shrink from 10 to eight, with three executives moving elsewhere and a new role being created.

Five corporate centre executives (from finance, HR, strategy, legal or corporate relations) will be reduced to three, though there is no indication of which roles will go.

The new position of chief product officer will be responsible for improving "product and pricing activity across the company" but would not have a hand in any of the fibre or wholesale copper products under regulation.

Acting chief executive of Telecom Wholesale, Nick Clarke, will also stand down from the top team, but continue to report to Reynolds.

Clarke's repositioning was part of wider moves of aligning Telecom Wholesale with Chorus "in anticipation of regulatory change and a demerger", the company said.

If Telecom's broadband bid is successful, it is required to split its network arm, Chorus, from its retail business. Chorus would become a separate listed company and be responsible for rolling out and managing the fibre network.

In a bullish statement, the telco also said yesterday it had tabled its final bid for the broadband build.

But despite claiming the company had put forward the best possible bid, Reynolds said he retained a degree of caution over Telecom's chances. Its main competition comes from small lines companies represented by the New Zealand Regional Fibre Group.

The group's chief executive, Vaughan Baker, said yesterday confidence was high among its members.

Communications Minister Steven Joyce said to expect an announcement on UFB in the coming weeks.

Joyce confirmed he would tweak telecommunications legislation before Parliament. After criticism from industry players, the minister said the wording of the law would be changed to clarify the definition of "equivalence of inputs" (EOI).

EOI requires the network owner to offer the same level of service to all retailers on-selling broadband services to internet users. But chief executive of the Telecommunications Users Association Paul Brislen said network owners would only be required to offer EOI to retailers at the end of 2019 and stressed that equivalence should be offered from day one.

- NZ Herald

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