Telecom chief executive Paul Reynolds will lose one of his top executives and be left heading a company with one-third less revenue if the firm splits up this year.
Telecom revealed yesterday that Mark Ratcliffe will stay on as chief executive of Chorus if it is spun off as a separate public company.
Ratcliffe has held the role since 2008 and has worked for Telecom for 20 years.
If shareholders approve, Ratcliffe will head Chorus as it lays fibre internet cables in 24 towns and cities around New Zealand as part of the Government's $1.35 billion ultra-fast broadband scheme.
Telecom proposed to structurally separate its network and retail businesses as part of its bid for the broadband contracts, which it was awarded in May.
While the split will allow Chorus to take part in the internet plan, analysts say it will mark the end of the Telecom New Zealand has come to know.
With Ratcliffe confirmed as Chorus' boss, all eyes will be on Reynolds to see if he will steer Telecom's smaller standalone retail division after the demerger.
Rumours suggest Reynolds will exit the company once he sees the split through, despite claims he has not reviewed his career plans.
However, if he stays, Reynolds will be in charge of a shrunken Telecom that draws in 30 per cent less revenue than it does now.
He will also be fronting a business in a fiercely competitive industry, where revenue growth is expected to be as low as 0.27 per cent a year until 2015.
Although the asset split is still to be finalised, the company has revealed that Chorus will own both the fibre and copper infrastructure, while Telecom will hold on to the mobile network.
It is also expected that Telecom's wholesale business will be tied to the new Chorus and Telecom's Australian division, AAPT, will stay in the hands of the retail branch.
Telecom's 50 per cent stake in the Southern Cross internet cable - New Zealand's only international internet link - is likely to go to the retail firm.
Based on Telecom's 2010 results, a separately listed Chorus would have an annual revenue of about $2.3 billion and the standalone retail branch revenue of $4.6 billion.
Telecom Group revenue for the year ended June 30, 2010, was $7.6 billion.
The company has said the split will be put to a vote by the end of the year and analysts believe a proposal will go out by the end of August.
AFTER THE BREAK-UP
CHORUS
* Headed by Mark Ratcliffe.
* Separate public company with its own listing on the stock exchange.
* Owns the fibre and copper networks and Telecom's wholesale business.
* Revenue of about $2.3 billion.*
TELECOM RETAIL
* Headed by Paul Reynolds.
* Owns the mobile network, Telecom's Australian AAPT business and a 50 per cent stake in the Southern Cross internet cable.
* Will have a revenue of $4.6 billion.*
* Based on Telecom's 2010 financial results.
Mark Ratcliffe. Photo / Greg Bowker
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