Telecom publishes demerger shareholder information

MEDIA RELEASE

13 September, 2011

Telecom publishes demerger shareholder information

Telecom has today published the demerger scheme booklet in order to provide shareholders with the necessary information to allow them to vote on the demerger proposal, as well as a wide range of other documents.

Telecom will be holding separate investor and media briefings today. Dial in details are below.

Telecom proposes to separate its fixed line access infrastructure business, Chorus, to enable Chorus to take a leading role in the Ultra-fast Broadband (UFB) initiative. Following the demerger, "New Chorus" will be a stand-alone, separately listed company, and it will be the Crown's partner for approximately 70% of the UFB initiative.

The proposal will be put to shareholder vote at Telecom's annual meeting on Wednesday 26 October 2011, with all proxies required to have been received by Computershare by 10am NZ time on Tuesday 25 October.

If approved, and provided certain other conditions are met, Telecom expects to demerge Chorus by 30 November 2011.

The documentation also includes a detailed report prepared by investment and advisory group Grant Samuel, which provides an independent assessment of the proposal.

"The Telecom Board believes that the demerger will maximise long term value for Telecom shareholders," said Paul Reynolds, Telecom CEO. "It allows Chorus to take a leading role in the Government-led fibre initiative, aligns the interests of Chorus with the Government's UFB objectives, and avoids Telecom competing with Government-backed fibre competition if Telecom is not a partner in the UFB Initiative.

"Not only this, but the demerger presents the opportunity for New Zealand to move to the very forefront of global telecommunications.

"Telecom will be the first comparable incumbent telecommunications company in the world to fully-separate its fixed line access network business, a move that will enable the introduction of a much improved regulatory environment.

"As well as delivering world class infrastructure, we believe this is an efficient and effective solution that delivers the right outcome for all stakeholders, as well as a sustainable industry structure.

"We firmly believe that this proposal is in the best interests of shareholders, the telecommunications industry as a whole, and for New Zealand."

"We encourage shareholders to read carefully the extensive information we will be sending them, and cast their votes on this very important resolution," he said.

The documents published include:

* A letter from Chairman Wayne Boyd, inviting shareholders to the annual meeting and outlining the resolutions that they will be voting on * The notice of meeting and associated voting forms for the annual meeting * The demerger scheme booklet, which provides shareholders with all the necessary information to allow them to vote on the proposal * A presentation that outlines the proposed demerger * Notice of meeting and other information relevant to Telebond holders and other holders of Stock issued by TCNZ Finance Limited.
* An invitation to shareholders to road show presentations across New Zealand

The documents are available at https://www.nzx.com/companies/TEL/announcements/213672

ENDS

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