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Telecom - Source: ONE News -
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A telecommunications industry analyst thinks Telecom's proposed split is a good idea but it may not be supported by shareholders.
Chris O'Connell told TV ONE's Breakfast that he supports structural separation for Telecom.
"I think Telecom's problem is that vertically integrated companies work fine when you had a monopoly (but) the problem these days is that people can put together their own combinations of services to meet whatever needs they have and it's very hard for (Telecom) to do that competitively."
He said the move should allow Telecom to compete better in a deregulated environment and that many people in the industry had been calling for separation for a long time.
Assuming the split was approved by 75% of Telecom shareholders, O'Connell thought the plan did have benefits for New Zealanders.
"We will have competitive ultra fast broadband (UFB) delivered by fibre optics, hopefully to the home or as close to the home as possible. That means speeds well in excess of what most of us enjoy today," he said.
O'Connell said many applications that were not being widely used now - like streaming media, video conferencing, Skype - would be widely available and much cheaper under UFB.
He expected not all Telecom shareholders would support the split as the remaining retail arm of Telecom - once Chorus2 is split out - would be left in a hugely competitive environment of numerous telecommunications companies.
Telecom shares are now trading around $2 but previously were worth over $9.
O'Connell also pointed out that Telecom was not guaranteed to participate in the government's $1.5 billion UFB rollout as it was still subject to a tender process.
