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Crown Fibre goes for regional deals over Telecom's proposal

Thursday 9th September 2010

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Crown Fibre Holdings has prioritised three regional deals in its short list for the government funded roll-out of an ultra-fast broadband network.

The government agency whittled down its list to 14 contenders, and has put three regional bids at the top of its negotiation list, damping the opportunity for a national solution such as Telecom has offered.

Alpine Energy is in the box seat for Timaru, the Central North Island Fibre consortium is pitching for much of the central North Island, and Northpower has priority for Whangarei.

“These three parties have displayed the best proposals including a combination of access prices, funding provisions, industry experience and financial banking,” chairman Simon Allen said in a statement. 3

“On the basis the CFH successfully concludes binding offers with these parties, the government and its partners will be bringing fibre to a significant part of New Zealand.”

That’s a blow to Telecom, which has been pitching for a nationwide solution, including the regional broadband initiative not covered by this deal, going so far as to propose carving out its network business to participate in the government plan.

The phone company’s shares went into a trading halt before the announcement and slipped 0.9% to $2.11 when the halt was lifted.

Chief executive Paul Reynolds said the phone company is evaluating the detail of Crown Fibre’s announcement, and is open to working with the three prioritised groups.

“We recognise that our bid is more complicated than those of other bidders, and that Crown Fibre Holdings does not have a mandate in the areas of RBI, regulatory reform and legislative change,” Reynolds said. “Telecom’s proposal includes a potential structural separation by demerger in July next year. Telecom will need appropriate engagement with the whole of government in order to meet this challenging timeframe.”

Reynolds said a national solution is the most efficient to roll-out the network and would avoid duplication and waste.

CFH’s Allen said the agency is open to either a Telecom or Regional Fibre Group deal to complete the balance of the project, and said Canada’s Axia NetMedia didn’t make the short list.

Communications Minister Steven Joyce said the proposals from the three priority parties showed “significant promise and would deliver a strong first step in the roll-out of UFB.”

The other short-listed companies are:

CityLink covering the Wellington region,
Central Fibre Consortium,
Electra covering Levin and Kapiti,
Electricity Ashburton covering Ashburton,
Enable Networks covering Christchurch and Rangiora,
Flute Network covering Dunedin, Invercargill and Queenstown,
Network Tasman covering Nelson and Blenheim,
Network Waitaki covering Oamaru,
Westpower covering Greymouth.

Businesswire.co.nz

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