New Zealand Telecom's biggest problems

Doug Mohney, FierceTelecom
20 Feb 2009

A columnist for New Zealand's National Business Review takes a look at the five biggest headaches the incumbent phone company faces today, along with suggestions on how to solve them. Chris Keall looks at all parts of Telecom New Zealand's business and finds there's work to be done.

TNZ's largest challenge may be to raise up to $NZ3.5 billion ($1.79 billion) for a national broadband fiber build out. Telstra may offer legal challenges for open access to the network (hmm, can we say 'net neutrality') while Telecom has to juggle its books to dig up the cash for a capex build in an economic downturn.

A government loan or a joint ownership stake in the national network may be feasible, but then it's definitely into that required open access thing; not really a favorable position to take when TNZ wants to make a 20% return on the network. The final option may be to sell shares to an overseas firm such as Singtel.

If that wasn't enough fun, Telecom should decide if it should scale up its operations in Australia or shut them down. Its Oz operations have lost customers, and the company is getting whipped by other competitors that have the scale to bid on Australia's national broadband network. Keall is predicting a departure from the market.

Finally, there's the matter of a single submarine cable linking New Zealand to the rest of the world. Telecom has a true monopoly on long haul broadband through its Southern Cross operation, but another firm is trying build a second cable to Sydney - thereby breaking the monopoly - at an estimated cost of $NZ200 million.

For more:"¨- The National Business Review's Chris Keall looks at NZ Telecom's problems.

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