Telecom, Chorus to share assets following 'demerger'

Telecom and the Ministry of Economic Development (MED) have today published a range of documents that provide further details on Telecom's split into two companies, each of which will have its own chief executive, board and NZX listing.

The split is a requirement of Telecom's Crown fibre contract, and is scheduled to take place by the end of this year, subject to debtholder and shareholder approval.

The documents reveal fresh detail on how Telecom assets will be divvied up between the spun off network division, Chorus, and what remains of Telecom (investors are left hanging on another key point of interest - how debt will be devided between the two companies).

Today's new information also provides a possible point of controversy, with confirmation that a number of assets will remain shared between the "demerged" network and retail halves of Telecom. Key assets such as "Fibre optic cable" and "radio towers" are among those that will be shared.

Another notable feature - "Goodwill" goes into the New Telecom column.

And while most of Telecom's approximately 770 exchanges will be owned by New Chorus, "New Telecom" will own the 30 largest exchanges - a large chunk of infrastructure that some may not have anticipated would fall under the retail wing.

The proposed asset allocation still has to be approved by Communications Minister Steven Joyce.

Telecom shares [NZX:TEL], which recently hit a 21-month high of $2.62, were up again yesterday to $2.64, and up a further half cent in early Tuesday trading.

The company this morning provided a diagram of how it sees the split (click to enlarge):

The company also provided a list of the asset allocation.

Assets allocated to "New Chorus"

Passive copper network
ADSL, DSLAM, DSL
Transport copper cable
MDF
Active cabinet shells
Access HDSL/SHDSL/HDB3
PCM30 transport
PDH FOTS access
SDH FOTS access
Access DMR
CMAR
Country sets
Media converters
PON cabinets
GPON shelves line cards
GPON HONTs
Access small pair gain
Voice and ISDN Mux

Assets allocated to new Telecom

Mobile network (Mobile radio towers, antennas and feeders, CDMA base stations, CDMA switches hardware, CDMA switches software, WCDMA core hardware, WCDMA core software, WCDMA base stations, "Other mobile"
Submarine cables other
Network firewalls
Satellite earth station
VoIP hardware
VoIP software
PSTN/ISDN/IN
PSTN/ISDN hardware
PSTN/ISDN software
IN, VSP, VCC hardware
IN, VSP, VCC software
ATM
Legacy data networks
IPNet
Broadcast transport
Access broadcast
CBR data access
CPE voice equipment
CPE managed networks
CPE data equipment
ISDN NTUs
Payphones
Submarine cable IRUs
Goodwill

Assets groups to be allocated between New Chorus and New Telecom

Fibre optic cable
Radio towers
PDH FOTS transport
SDH FOTS transport
DWDM transport
Transport DMR
Transport radio antennas and feeders
Network routers hardware
Network routers software
Building services
Power systems: general
Power systems: access derived systems
Tools and plant
Freehold land
Land site costs
Buildings
Property fit-outs
Motor vehicles
Office equipment
Furniture
Spectrum licences
Land easements
Land licences
IT Hardware and Software
Ducts and manholes

More details are on the MED's website here.