Telecom shareholders have approved carving the company in two, letting it shed regulatory burdens and hitching its network business to a billion dollar-plus subsidy to build a national broadband network.
Of those shareholders who cast their vote at the annual meeting in Auckland, 99.8 percent were in favour of the demerger. Bond holders have already approved the deal.
Subject to final court approval, Telecom will split off its Chorus fixed line infrastructure business, allowing it to take a leading role in the ultra-fast broadband initiative, the company said in a statement.
“The shareholder vote marks a critical step in the creation of an entirely new structure for the telecommunications industry in New Zealand,” chief executive Paul Reynolds said in a statement. “Telecom’s focus is now on the swift enactment of the split, along with ensuring both companies are well positioned as New Zealand moves into the fibre future.”
Telecom put forward the demerger proposal as a means to tap the government’s $1.35 billion subsidy to roll out a nationwide broadband network, and its Chorus unit was successful in winning about 70 percent of the contract.
The company expects a scheme of arrangement to enact the demerger will gain court approval by Nov. 30.
Telecom’s Chorus network unit is to become a standalone listed entity, at a benefit of some $500 million to shareholders based on the Crown subsidy, according to independent adviser Grant Samuel’s report.
The annual meeting marks the departure of chairman Wayne Boyd, along with directors Sue Sheldon, who becomes the new chairman of Chorus, and Ron Spithill.
Current directors Murray Horn and Kevin Roberts were re-elected to the Telecom board, where they will remain after the demerger.
Reynolds told the meeting that both companies will be well-placed in the new environment, with Chorus holding a near-monopoly of fixed line services, and new Telecom having strong market share in the retail space, as well as owning infrastructure such as the stake in the Southern Cross cable and the national backhaul network.
Shares in Telecom fell 1.2 percent to $2.53.
(BusinessDesk)
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