Telecom will be split up into 3 units and it has been approved by Communications and Information Technology. It was confirmed by Minister Steven Joyce today. The Company had requested these changes as it aims to support ultra-fast broadband related services and processes.

These undertakings for splitting the Company into three separate business units came into effect in March 2008. It will provide Telecom with the ability to design and offer capability to support fiber-based access services. This will help the Company to provide infrastructure for Government's ultra-fast broadband initiative.

The Company is working closely with the Government to develop future ultra-fast broadband networks. The Company has no choice but to spit up its retail and network businesses. But these steps will ensure that its earnings will take a hit.

Some analysts estimate that this will cost the Company around NZ$225 million. Other stress that it will also get benefits like reduction in regulatory fees. It will also get income from a new fiber network which is under the charge of the Government.

The Company had earlier raised objections about these changes but it now wants to participate in something which has a bright future in the coming times. It will also ensure that it gets a chunk of Government funds earmarked for the national fiber network.