To boil down yesterday’s events:
Crown Fibre Holdings (CFH) named the first three parties for its first round of “priority negotiations”; all were regional bidders.
It shunned Telecom, at least from this first slate of binding negotiations.
Although it’s still in the race, investors didn’t like Telecom being sidelined (CFH said it’s waiting for more detail from several bidders). Or the implication that CFH is not buying the company’s nation-or-nothing line. Its shares fell 5.16%.
Telecom, in turn, shunned CFH right back.
To meet the ultrafast broadband project’s “challenging timeline” (that is, 75% of the country covered by 2019), Telecom would need “an engagement with the whole of government”, chief executive Paul Reynolds said yesterday.
It was beyond CFH’s mandate to tackle the legislative and regulatory reforms necessary for Telecom to structurally separate (a precondition, under the terms of the UFB tender) for the company to participate in Crown fibre project.
And, oh, Telecom also thinks the government’s separate, $300 million rural broadband initiative should be integrated with the urban-focussed UFB.
This took CFH by surprise. Again, any kind of merger of the rural broadband and urban broadband projects is beyond its remit (CFH has no involvement with the rural tender).
Appealing over CFH's head
Communications minister Steven Joyce says that, having given it parameters, he’s left CFH free to make whatever recommendations it sees fit (though cabinet is not obliged to accept them).
But Telecom is saying it’s too Big Stuff for CFH, and effectively appealing over CFH’s head for cabinet to take charge.
Arguably, it has little choice, given that it’s so tightly bound by the Telecommunications Act, and can’t spin off Chorus (or have any hope of selling deal to share and debt holders) unless it can gains legal changes that are, indeed, far beyond CFH’s mandate.
Throwing in rural/urban fibre integration is more provocative.
It’s a jape that would further maginalise CFH - though only, of course, if Mr Joyce is open to Telecom’s call for an a whole of government response.
Throw in Dr Reynolds not-so-veiled threat to cherry-pick the most commercial fibre business if his company is left out of the UFB, and you have one very messy intriguing stand-off.
MORE:
Telecom shunned in Crown fibre negotiations
Telecom, Crown Fibre Holdings in war of words
Telecom still a ‘buy’; Chorus key to 'grand consortium' - analyst