Telecom confirms separation, alliance focus

After a horror week on the markets, with its share price crashing to a record low, Telecom's fortunes look like they have started to improve.

Forsyth Barr broker Suzanne Kinnaird said yesterday she believed news concerning Telecom in the next few months would become less negative.

However, the latest share price was close to reflecting her $1.85 ultra-negative scenario valuation under which Telecom was locked out of the ultra-fast broadband (UFB) project and the Chorus business faded to zero over time.

Telecom was trying to work out if the costs of separation could be offset by changes in regulation to benefit its shareholders, chief executive Paul Reynolds said at an investor day in Sydney.

The company was open to partnerships once it got "the big picture right," and it was not possible to put a cost on separation until it was worked out exactly what would be separated.

Dr Reynolds noted in an answer to a question that the Government would get more for its investment in UFB by partnering with Telecom because it already had 25,000km of fibre.

At the briefing Dr Reynolds explained the background to the announcement last week that Telecom would consider a full separation of its business to be able to participate in the Government's UFB project.

The company was already moving to an operational separation and had asked the Government to reconsider some of the undertakings given for that process.