The New Zealand government has awarded the bulk of second-round UFB fiber project contracts to incumbent Telecom NZ.
Telecom NZ will now – subject to shareholder approval - separate its Chorus network arm into a separate company as part of its agreement to participate in the project.
The operator will be responsible for rolling out a fiber network in Auckland, the eastern and lower North Island and most of the South Island.
Ratepayer-owned utility Enable Networks will cover the rollout in the city of Christchurch and surrounding areas. Telecom NZ said Chorus plans to ask Enable if it wants to enter a 50/50 joint venture for the rollout in these areas.
After separating Telecom NZ will be a retail-only company owning no local access fixed networks, the company said.
But competitors have previously expressed concern that Telecom NZ could merely be free to create a new monopoly with Chorus.
Announcing the deals, communications minister Steven Joyce said the UFB (Ultrafast Broadband) rollout will now begin immediately.
The government has a target of 75% population coverage by 2019, with schools, hospitals and 90% of businesses covered by 2015.
The win is the end of a long road for Telecom NZ. The company has been vying for the contract for months. It first offered to separate its retail and wholesale operations if accepted in August last year, and by October was anxious to reach a deal with the government as quickly as possible.
But the company was excluded from the shortlist of bidders for the first round of the project, covering roughly 12% of the population.