Key denies reports of govt stake in Chorus

Key denies reports of govt stake in Chorus

by Pattrick Smellie

May 14 (BusinessWire) - Weekend reports that the government is preparing to take a stake in Telecom's network business, Chorus, as part of the phone company's bid to join the ultra-fast broadband initiative are "not accurate", Prime Minister John Key said this afternoon.

Weekend media reports suggested that the government would take a majority stake in Chorus, which Telecom announced today it’s considering structurally separating from the rest of the business to allow participation in the government's $1.5 billion investment in ultra-fast broadband.

Chorus contributed underlying earnings for the Telecom group of $188 million in the first quarter of the current financial year, accounting for 41% of earnings before interest, tax, depreciation and amortisation.

Key's comments came as Telecom submitted new variations to its Operational Separation Undertakings today, and which Communications and Information Technology Minister Steven Joyce said would be expedited "through the usual process with an open mind."

Joyce said he regarded “as positive Telecom’s announcement today that it is considering structural separation as a possible way to become involved with the government’s ultra-fast broadband roll-out."

“A potential structural separation of Telecom would involve a number of complex regulatory issues to work through. I am encouraging Telecom to work with Crown Fibre Holdings (CFH) and the Ministry of Economic Development.”

In a move interpreted by other bidding parties as encouragement for a contestable bidding process after the weekend media reports spooked some into fearing a secret Telecom/government deal, Joyce said “there have been a number of positive recent developments from potential partners as momentum builds in the ultra-fast broadband initiative.

"Clearly potential partners are working hard to put their best foot forward.”

(BusinessWire) 18:20:24

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