Broadband still open to players in the regions

The Government's knockback of regional solutions for improving rural broadband in favour of nationwide options will not be the death knell for regional infrastructure players, says Vector.

On Thursday, Communications and IT Minister Steven Joyce said he would only accept bids from companies able to provide a nationwide solution for rural broadband, ruling out bids from regional players.

Joyce encouraged regional players to form partnerships with the national bidders and gave companies an additional six weeks to undertake negotiations.

Opposition MP and Labour communications spokeswoman Clare Curran said a death warrant had been issued to regional bidders.

Vector chief executive Simon Mackenzie said this announcement does not knock his company out of the running.

He said Vector, which has focused its proposals on the Auckland region, could deliver a national proposal for the urban and rural broadband initiatives through its partnership with local fibre infrastructure players under the umbrella of the New Zealand Regional Fibre Group (NZRFG).

"National solution, at the end of the day, doesn't mean you can't still have regional ownership. It's just about connecting it all together in one package," Mackenzie said.

Telecom has already indicated that it might look to partner with regional players on broadband initiatives, but a deal with Vector in the Auckland region has been emphatically ruled out.

Vector's technology business, which includes its telecommunications and smart metering businesses, saw a 12.4 per cent increase in revenue in the year to June 30 2010. Vector refused to say how much it had spent on its ultra-fast broadband campaign, which has included a high-profile advertising campaign.

"Should Telecom be successful in the fibre process, we still see that there is value with our fibre network and also reflecting that we have long-term contracts for many of our customers and also provide services to the future upgrade path of our own electricity networks," Mackenzie said.

Vector saw revenue grow slightly over the past year to $1.19 billion, reflecting increases across electricity, gas transportation and technology, said chief financial officer Alex Ball.

"We've seen growth in customer numbers, revenue and net profit. Considering the economy, reduced electricity volumes and the continued roll-off of legacy gas contracts, we're pleased with this result."

Net profit after tax (npat) increased 17.3 per cent to $194 million, with underlying npat increasing to $173 million. Vector has lifted its dividend from 13.75c a share in 2009 to 14c this year. Shares closed up 4c to $2.12.