Gulf Harbour-based Quest Communications will not bid in the Government's 3G spectrum auction to be held next Monday.
As registrations for the auction closed yesterday, Quest chief operating officer Nigel Colling said the company had decided not to proceed in the light of a general lack of business confidence,and Government direction.
Mr Colling said Quest had been contemplating a war chest of more than $400 million to bid for a spectrum block.
If that bid had been successful, the company would have spent at least another $500 million on the development of a mobile phone network to compete with established carriers Telecom New Zealand and Vodafone.
Mr Colling said Quest had also cancelled plans to open a call centre that would have employed 300 people.
The centre would have exploited the $250 million worth of Southern Cross Cable bandwidth the company bought this year to provide services to customers overseas.
The speed of the fibre-optic link would allow an operator in Auckland to deal with a customer in Europe without the caller realising he or she was speaking to someone in another country.
"Now we have pulled the pip on the whole thing," Mr Colling said. "We are going to stick with the knitting."
He cited the forthcoming Employment Relations Bill, in particular clauses relating to financial information to be provided to employees, as one reason for the decision.
"We couldn't afford to employ a lot of staff who would have access to company secrets," he said.
Told that the Government had already agreed to review this aspect of the legislation following pressure from other quarters, Mr Colling replied that it was too late - the decision had to be made.
"We had a real battle with our investment team."
Backing for the project had come from a European telco, "making a strategic investment," but Quest would remain New Zealand-owned.
Acting Communications Minister Trevor Mallard declined to comment last night on the Quest decision.
Last month in Parliament Mr Mallard denied that the Government had been considering a separate deal under which Quest Communications would pay for and then lease back $250 million worth of mobile telephone spectrum from the Maori Council.
Mr Colling said Quest would now continue with its plan to become a carriers' carrier, offering international bandwidth to telcos, internet service providers and businesses when the Southern Cross Cable opened in November.
