21 Apr 2011

Broadband contract boosts Telecom share price

7:11 am on 21 April 2011

Telecom's share price jumped 5% on Wednesday the successful conclusion of talks with the Government to roll out an improved broadband service to the country's rural community.

After two months of negotiations, Telecom and Vodafone's joint bid won the $285 million initiative to provide high speed broadband to 252,000 rural users.

Telecom will spend tens of millions rolling out another 3000 kilometres of fibre cable while Vodafone will spend more than $100 million building another 154 towers upgrading 380 more.

Vodafone says it won't be a quick money earner and Telecom says the contract will not change its earnings or capital spending forecasts.

Telecom's share price rose 10 cents to $2.155 on Wednesday.

The agreement means 95% of rural schools and 86% of rural households and businesses, will have access to high speed within six years.

Communications Minister Steven Joyce says rural users will get speeds of at least 5 megabits per second as well as services and prices comparable to those urban users receive.

The network will also be open to other telecommunications firms to provide services, in order to promote competition.

Vodafone chief executive Russell Stanners says over half of rural homes will have the choice of fibre or mobile, as well as a host of potential broadband suppliers.

Telecom and Vodafone will start work on the project by mid-year.