KEY POINTS:
Telecom chief executive Paul Reynolds was asked yesterday whether the company was at a disadvantage under the new structure that began last month, splitting it into three divisions.
It was not spelled out on any agenda but it was the subtext of a briefing for analysts in Sydney.
Telecom made good returns as an unregulated firm, but can it do the same now that it has been forced to unbundle the local loop and faces regulation?
"My experience is that separation brings a clarity of role. You take the crutches away from the company, you get better and that develops value in the company," Reynolds said at the end of the four-hour briefing.
If the impact can be judged on the share price - Telecom was down 8c to $3.72 - then the reaction was equivocal, though the entire market was down on the day.
But Reynolds at least delivered a road map to get New Zealand's largest public company back on track after a period when it has seemed to be drifting aimlessly in the face of a swarm of new challenges. Telecom was on March 31 officially split into three divisions - networks, wholesale and retail.
Reynolds said a key to recovery was Telecom Wholesale, which will sell capacity to the Telecom retail division and to the company's competitors.
But the recovery is based in part on underperforming mobile phone services which Reynolds said had been in a sort of "cul-de-sac" with diminishing market share.
Telecom is emphasising the new WCDMA mobile phone network, which is expected to start in November offering new services such as video. Extra demand for higher-value broadband services and the performance of its technology firm Gen-i - operating here and in Australia - are also expected to boost returns..
But the delay in replacing its current network with WCDMA to match Vodafone has hurt the bottom line.
Telecom is particularly vulnerable with New Zealand Communications expected to start a third mobile service.
But Simon Moutter, the chief operating officer and temporary head of the retail division, was confident thatthe new mobile network would succeed against similar services on Vodafonedue to the strength of the Telecombrand. Moutter - who is one of the "last men standing" from the Theresa Gattung regime - summed up the state of the company in the past by saying it had a"relatively resigned acceptance to declining performance in New Zealand and unconfident approach to the market".
"Today is like liberation day and the start of a new era."