Telecom to become 3 companies

Obviously Telecom isn’t happy about this, 3 companies is more expensive and cumbersome to split into than 2, but thats too bad really.

While I do think that Telecom has been getting a bit of the brunt end lately, I don’t mind this decision too much. I think its definitely a good thing in the long term and if Telecom doesn’t like it, they should’ve played nice in the first place. They’ve got no one to blame but themselves and their own actions.

A Select Committee is recommending the change in a bid to force the telecommunications giant to give competitors equal access to its fixed lines. But it held back from recommending Telecom sell the split-off operations. The three proposed divisions are network access, wholesale and retail.

^{Telecom splitting into three – NewstalkZB}

I think this is definitely a good thing. The company can effectively stay all together under one holding company, but each of the three seperate companies would be required to trade with the other 2 on an even basis as they trade with their competitors and customers. The profits still go up the chain as always, but the 3 companies would effectively be distinct organisations.

What I think would have been better for Telecom is if they’d voluntarily split in the same way Fisher & Paykel did a few years back. Admittedly F&P did it because it made more market sense for them to do so, but if you look at how things have worked out for them, they’re doing really well out of it.

Unfortunately, Telecom was too busy being greedy with what they did have. As I have said many times before… If you’re not willing to make a sacrifice in the short term, you will definitely lose out in the long term. I am a perfect example of that.