TELECOM TO SEPARATE WHOLESALE AND RETAIL OPERATIONS

27 June 2006

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Telecom is to move voluntarily to create a separate, independent wholesale operation, incoming Chairman Wayne Boyd and Chief Executive Theresa Gattung said today.

The move will centre on transparent, non-discriminatory arrangements for regulated services for both wholesale and retail customers.

“The country expects world-class broadband services and our decision to reorganise our business is one more step towards ensuring healthy competition exists to provide that,” Mr Boyd said.

“We have looked at a number of arrangements in place or under consideration around the world, including BT in Britain and Telstra in Australia. We now intend to initiate the best form of separation to suit New Zealand’s conditions.

“The planned separation structurally reinforces the wholesale charter which we’ve been working through with wholesale customers for the past few months. It is another step to deliver customers the benefits of the new regulatory environment as soon as possible.

“On that path we’ve also suggested industry user groups to work on the specifications and implementation plans of the new services.

“When this is set up, all players will be dealing with an independent wholesale unit which will operate according to a number of firm working principles.”

These will include:

• Equivalent service delivery processes and service levels for our wholesale customers

• Transparent external reporting of information so all customers can see the facts

• Oversight by an independent monitoring group which will include industry and stakeholder representatives

“The provision of regulated services will be fair and transparent and it will be independently monitored to make sure it’s as good as we say it is,” Mr Boyd said.

“We anticipate that with the creation of the independent wholesale unit, Telecom will work on a series of binding undertakings around the services that will be provided.

“The Chief Executive and the management team have the full support of the Board in implementing this new strategy,” Mr Boyd said.

Ms Gattung said Telecom was responding to the needs of its customers in the new environment.

“It’s just a couple of months since the environment was announced and since then we’ve been working on a lot of fronts to meet the new expectations.

“Today we are talking about wholesale but across Telecom there is massive work going on to introduce our new business model. It will be centred on simple, compelling services for customers as we move to the world of next generation services.

“We are working on smoothly converged services across fixed and Mobile, and a suite of Internet Protocol services that will enable the delivery of more content and services and features such as IP-based voice services.

“We will be keeping our wholesale and retail customers closely informed and involved as we work on the new approach,” Ms Gattung said.

She said Telecom would give a further update on the review of the company’s strategy, along with guidance on the operating outlook for 2006-07 and capital management, together with the full-year result on 4 August.

ENDS

For inquiries please contact:

Sean Martin, 027 281 4975
John Goulter, 027 232 4303

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