New Zealand Awards First Fast Broadband Contracts

New Zealand has selected two groups to deliver ultra-fast broadband services in parts of the North Island, the first contracts awarded in a national plan.

WEL, an electricity grid operator, and its partners will build a network in the Waikato, Bay of Plenty and Taranaki provinces, Communications Minister Steven Joyce said in an e-mailed statement today. Northpower Ltd. will provide services in the northern city of Whangarei, he said.

Both groups were selected in September for prioritized talks as the government sought partners for a NZ$1.5 billion ($1.1 billion) nationwide fiber-optic network that will deliver fast Internet to homes and businesses. Telecom Corp. (TEL), the nation’s biggest telephone company, has proposed a role in all regions and has said it will demerge to create a separate network company to satisfy government requirements.

“Telecom’s proposal is focused on the remainder of the country,” Chief Executive Officer Paul Reynolds said in a statement. “We continue to engage in the process to determine the successful partners for the rest of the country, however time is running out and we are conscious that our shareholders need resolution.”

Telecom shares fell 3 cents, or 1.4 percent, to NZ$2.15 at 12:30 p.m. in Wellington.

Auckland-based Telecom is proposing its Chorus network unit partner with the government, while the remaining sales unit offers services as a structurally separate company. Reynolds said Telecom is open to partnership with other owners of fiber assets, including the parties chosen by the government.

Negotiating List

The contracts confirmed today cover about 16 percent of the country, Joyce said. The government will announce a list of parties with which it will negotiate over the remaining regions, including the largest cities of Auckland, Christchurch and Wellington, he said.

The first services will be available in Whangarei before the end of the year, Joyce said.

WEL’s partners include Waipa Networks Ltd., also a power company, and the Hamilton Fibre Network, it said in a statement. It plans a 5,000-kilometer (3,100 miles) network to cover a population of about 430,000 people, it said.

The value of the pact will be NZ$300 million and the project will create 300 jobs, WEL said.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net

To contact the editor responsible for this story: Iain Wilson iwilson2@bloomberg.net

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