Phone and broadband user groups are outraged at Telecom's plan to spend nearly half of its $1.2 billion expenditure this year on super-fast Australian broadband while its ageing domestic network struggles to keep up with demand.
Telecom announced on Wednesday it was making a bid of A$357 million
($400 million) for Australian network company PowerTel.
Analysts have calculated that Telecom plans to spend nearly half of its total capital outlay on its Australian network this year.
PowerTel has the second-largest fixed optic fibre network in Australia with super-fast broadband technology known as ADSL 2+.
It also has a city fibre network connecting more than 600 buildings in Sydney, Melbourne, Brisbane, Canberra and the Gold Coast.
Telecom's total spend on its network this year will be $1.2 billion. This consists of capital expenditure of $800 million and the $400 million bid for PowerTel.
Of the $800 million capital outlay, the company plans to spend $120 million on investment in its struggling Australian subsidiary AAPT.
This brings Telecom's planned expenditure in Australia to $520 million, almost half of the $1.2 billion total.
Telecommunications User Association of New Zealand chief executive Ernie Newman said yesterday that while he wished the best for Telecom in the Australian market, he wanted to remind the company of the "very substantial unsatisfied demand for broadband" in this country.
He hoped that Telecom had set aside appropriate reserves to get its network up to a suitable standard to cater for consumer demand for broadband. internet New Zealand executive director Keith Davidson said New Zealand was placed 22nd out of 28 countries in the OECD in terms of what telecommunication companies spend on broadband infrastructure.
"That shows why we wallow in the lower quarter of the OECD ... because we don't have the product that the countries do who are at the top of the broadband stakes."
Observers said that Telecom's desire to service its large corporate customers in Australia was behind the bid for PowerTel.
