When Telecom New Zealand completes its demerger, a move that will split the incumbent telco into two independent companies selling retail (New Telecom) and wholesale (New Chorus), they'll be conducting business with a new leader as current CEO Paul Reynolds will leave the service provider.
The stock market did not like the news and sent Telecom's stock down 3.6 percent to NZ 2.54 (USD 2.16) over potential future earnings concerns about the two units.
Telecom New Zealand is breaking up its retail and wholesale companies so it can participate in New Zealand's ultrafast broadband network (UBN) initiative. Under the terms of the agreement it struck with the government, TNZ will build 75 percent of the UBN.
If the demerger is completed in late November as planned, New Telecom's board will launch a search to replace Reynolds. Reynolds will stay on during the integration process, but will leave after that process is complete.
"It will be a good time to hand over to a new CEO," Reynolds said in a statement.
Shareholders, meanwhile, will get one share in New Chorus for every five Telecom shares held and they will also retain their stakes in New Telecom.
- Reuters has this article
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