Telecom Shares Fall Most in Three Months on New Zealand Broadband Decision
Stock Chart for Telecom Corp of New Zealand Ltd (TEL)
Telecom Corp., New Zealand’s biggest telephone company, fell the most in more than three months after the government indicated it may not favor the company’s proposal to be a partner in a national broadband network.
Crown Fibre Holdings today said it was in “prioritized negotiations” with three companies to deliver services in eight of 33 regions being offered. Telecom remains on a short list and will be considered for all or some of the remaining regions, the government agency said in an e-mailed statement.
The government is planning a NZ$1.5 billion ($1.1 billion) nationwide fiber-optic network and is weighing bids from potential partners. Auckland-based Telecom has proposed a role in all regions, and has said it will demerge to create a separate network company to satisfy government requirements. The stock fell 5.2 percent, the most since May 25.
“We continue to believe that a national solution is the most efficient and effective way of delivering fiber to New Zealand,” Telecom Chief Executive Officer Paul Reynolds said in a statement. The company is open to partnership with others, including the three parties prioritized for negotiation, he said.
Telecom shares fell 11 cents to NZ$2.02 at the 5 p.m. market close in Wellington trading. The benchmark NZX 50 index dropped 0.4 percent.
Crown Fibre said it is advanced talks with three groups to deliver services in Timaru, Whangarei, Hamilton, Tauranga, New Plymouth, Whangarei, Hawera and Tokoroa. Telecom estimated these provincial regions represent about 12 percent of New Zealand’s 4.4 million population.
Axia NetMedia Corp. of Canada, which teamed with Vodafone Group Plc to also propose a national partnership, failed to make the short list at this stage because parts of its bid didn’t match the government’s policy, Crown Fibre said.
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