A vote on separating Telecom from network arm Chorus has been approved in a shareholder vote at the company’s AGM in Auckland today.
The vote needed 75% approval to pass, but achieved a massive 99.8% approval.
The company is now free to separate from Chorus, allowing the network arm to take up its contract to build 70% of the government’s $1.35 billion Ultra Fast Broadband (UFB) network.
Before the vote, outgoing Telecom chairman, Wayne Boyd, explained that Chorus has been operationally separate from Telecom since 2008, but in order to bid for the UFB contract, the network division had to be completely separate from the company’s retail operation.
"Reaching agreement with the government on these matters has been no easy task,” Boyd says.
Telecom CEO Paul Reynolds, who will depart the company once the demerger is complete, told shareholders it is an exciting opportunity for the company.
"Both branches are excited about what a properly mandated Chorus and an unleashed Telecom can achieve,” Reynolds said.
"Telecom’s management can now focus on competition rather than compliance.”
Reynolds adds that the demerger could have implications on other telcos around the world.
"We are the first incumbent telco in the world to take this step,” Reynolds says.
"I assure you other countries are watching with the greatest interest and intensity.”
The split is due to be complete by November 30.