Telecom charting 'new direction'

Telecom, which has had $2.25 billion wiped off its value in 10 days after the Government announced it would take a heavier handed regulatory stance, today said it planned to adopt a new approach to its business.

Chairman Roderick Deane also reaffirmed the company's commitment to chief executive Theresa Gattung, saying she would lead a team of senior executives to develop recommendations for the new direction.

Dr Deane said the Telecom board fully supported Ms Gattung and her management team.

"Last week, a new regulatory regime was announced that fundamentally changes the telecommunications market in New Zealand," Dr Deane said.

"Telecom understands that the public supports these changes. We are committed to reviewing our strategy and future planning to respond to the new environment," he said in a statement.

Telecom's share price slumped last week after the Government said it would force Telecom to open up its network to rival broadband suppliers. It took another tumble when Prime Minister Helen Clark said the Government would also take a tougher regulatory approach to mobile phone termination charges.

Further pressure came after comments made in March by Ms Gattung were published this week saying telecos used price confusion as a prime marketing tool.

Helen Clark called the comments "inappropriate" and said Telecom must have had its head in the ground if it did not see the regulatory decision coming.

Ms Gattung and Dr Deane also came in for criticism from analysts for failing to quickly respond to the government decision when Telecom published its quarterly result on Friday. They said there was not even a rough guide provided on how it would affect earnings.

Dr Deane said the new environment would require a different approach from Telecom.

He said he wanted to make it "abundantly clear that the board and management recognise the need for this to occur".

Ms Gattung would be joined in the review team by Kevin Kenrick and Mark Ratcliffe.

The objectives will encompass:

* Reshaping the company's overarching strategy;

* Reviewing wholesale arrangements, including an in-depth review of lessons from models in other countries;

* Implementing Voice over internet options for business and residential customers;

* Developing the roll-out of faster, interactive Next Generation Broadband services based on ADSL2+;

* Developing simpler, easy-to-use services reflecting the convergence of fixed and mobile services;

* Facilitating personalised customer-driven combinations of services, in a simple and easy to use way;

* Simplifying the operating model and customer offerings to facilitate lower costs and lower prices, including wider use of self-service arrangements.

Dr Deane said Telecom was a cornerstone of New Zealand's modern economy.

Telecom would be making a further announcement about aspects of these changes in June.

Telecom's shares were down 5c at $4.58 at midday.

- NZPA