Everything that I have read suggests that the network is currently not fit for launch. That is not surprising. I know that there are a lot of people in Telecom who are working damned hard on getting this network up and running. I don't think this is an execution issue -its a reality issue.
Telecom announced that it was going WCDMA in June 2007, suggesting that build would not commence until late that year that it would be in market by Christmas this year.
That's 12 months - gutsy stuff.
By comparison, the deployment of CDMA in 2001 / 02 took 15 months (that was an extremely aggressive and well managed deployment) and was voted telecommunications project of the year by TUANZ. That was on existing sites.
Vodafone's 3G deployment was of the order of 15 months after signing Nokia up - and they were hit pretty hard by customers reacting to coverage issues.
In Telecom's case they are rolling out 2 networks
1. 2100 MHz WCDMA
2. 850 MHz (either GSM/EDGE or WDCMA)
The 2100 MHz network in particular requires new sites and resource consents. To go from 'hmm I think I'd like a new site in this area' to having property and resource consent in the bank takes about a year. A year was always going to be too short.
You would have to be doing well to do both of these in 15 months - not forgetting Telecom have operational separation, Next Gen broadband and all the rest happening.
If Telecom were beholden to a pre-Xmas date, this network would look more like MobileMe.
It will be much better for the long-term shareprice for Telecom to get coverage right for this new network as opposed to try and bank a short-term win, and then brand damage based on a sub-standard network. And to think that there would be significant uptake on the new network before it was bedded in pre-Xmas is optimistic to say the least. One can only hope Telecom has some CDMA offers to go out that are sharp enough to stay competitive this Xmas.
Reynolds has already announced in last week's result that there will be no EBITDA growth until 2010. Good to see him stick to the long-term plan - this approach will start to turn Telecom around from a dividend stock to a growth stock. That's the real issue for the analysts - the dividend payout made Telecom a very attractive part of their portfolios in the past. Now that Telecom are focussing on longer term bets this stock is no longer easy money. There is the possibility of still quite good dividend payouts and (if you are risk embracing) the possibility of longer term share price growth.
Key issue now is when to get in.