KEY POINTS:
Telecom plans to ditch its mobile network and spend up to $400 million switching to technology used by competitor Vodafone, according to an industry publication.
Telecom is about to announce a deal with Alcatel-Lucent to build a GSM (global system for mobile communication) network costing $300 to $400
million, Communications Day has reported.
Telecom will keep its current CDMA network for high-speed data services and voice calling as it moves customers to the new network.
Vodafone uses GSM technology for its 021 network.
Telecom spokesman Mark Watts would not comment on the possibility of a deal with Alcatel Lucent.
"No deal's been announced. There's speculation around it and I'm not going to add to it."
A GSM network announcement was flagged at the third-quarter results this month and came as no surprise to industry analysts, but the leak is likely to cause embarrassment to the company as chief executive Theresa Gattung fronts up to the Tuanz industry conference today.
Mark Ratcliffe, Telecom's chief operating officer for technology and enterprises, said the company would continue to invest in CDMA with an increasing likelihood it would go to UMTS some time in the future.
He said Telecom would be updating the market within the next quarter.
Communications Day reporter Juha Saarinen, who broke the story with Australian correspondent Natalie Apostolou, said the company was due to talk about the GSM network deal next Tuesday.
He said Telecom postponed an announcement planned for last night - believed to be the pricing for Telecom's roaming plans - in favour of talking about both next week.
An industry insider yesterday confirmed to the Business Herald that Telecom was close to a deal with Alcatel Lucent.
Saarinen said Telecom was understood to have been in talks with Ericsson and China's ZTE before going with Acatel-Lucent.
He said discussions with ZTE were used to drive the Acatel-Lucent price down from $500 million to between $300 and $400.
Last month Telecom announced a deal with Hong Kong mobile operator CSL to allow customers to roam on networks in 180 countries using WorldMode handsets.
The WorldMode phones work on Telecom's current CDMA network as well as the GSM networks more common overseas.
The service, due to come into effect mid-year, became increasingly necessary after Telstra's announcement it would be closing its Australian CDMA network next year.
Industry analyst Tim Shepheard of IDC said speculation had been rife that Telecom would move to a GSM network, particularly after Telstra called time on its CDMA network, leaving Telecom a "CDMA loner" in this part of the world.
"Although Telecom has sought creative solutions to the international roaming problem, it is still a major issue for many of its business customers," said Shepheard.
"The introduction of WorldMode handsets, to operate on both CDMA and GSM networks, has been viewed largely as a piecemeal solution."
According to Shepheard, an alternative to Vodafone for international roaming would put pressure on roaming rates.
"Currently Vodafone is the sole provider of true international roaming services for New Zealand-based customers, thus having the freedom to charge inflated prices."
Shepheard said a second GSM network could also encourage a new entrant to the mobile market, such as NZ Communications (formerly Econet).
He said the difficulty of forming roaming agreements with Vodafone has been an inhibiting factor for a third player entering New Zealand.
Telecom shares were down 6c yesterday at $4.82.
Head To Head
GSM (Global system for mobile communications): The network used by Vodafone is the most popular standard for mobile phones in the world with 82 per cent of the market.
CDMA (Code division multiple access): Telecom's current network is less widespread internationally than the rival GSM standard and its global market share has dropped to 18 per cent from 21 per cent in 2004.
