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Current as of 26/12/14 07:40PM NZST

Hamish Fletcher

Business reporter for the NZ Herald

Telco's result to go under microscope

Telecom Retail will become a standalone business. Photo / Greg Bowker
Telecom Retail will become a standalone business. Photo / Greg Bowker

Telecom's impending split will loom large over its full-year results this Friday and the announcement will reveal how different parts of the company are performing as it nears break-up, an analyst says.

Within the next year, the largest phone and internet provider plans to split its retail branch from its network arm, Chorus.

If the demerger passes a shareholder vote, Chorus will become a separate public company to roll out the bulk of the Government's ultra-fast broadband network and Telecom Retail will become a standalone business, selling phone, internet, mobile and IT services.

Analysts say the company will not discuss the split in depth at this Friday's results and investors will need to wait until Telecom releases a scheme booklet, which could be as early as next month.

Despite this, IDC analyst Rosemary Spragg said the interesting aspect of the announcement will be the performance of individual business units due to be divided up between the retail and network businesses.

"Looking forward to structural separation, [we're] looking to see how retail is performing relative to Chorus and wholesale," Spragg said. In the mobile space, Spragg said her attention would be in how many customers Telecom had managed to migrate to its XT network and the revenue it was pulling in from each user on this newer infrastructure.

"One of the biggest areas of potential growth is [mobile internet] and one of the big motivating factors for Telecom shifting to XT was so they could offer those advanced data services."

First NZ Capital analyst Greg Main said Telecom's mobile results would be an opportunity to see the state of the industry and the impact 2degrees was having on its competitors.

He would look to see if Telecom will absorb depreciation costs or write down assets before the split.

- NZ Herald

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