In our view, significant regulatory-driven uncertainties remain surrounding TCNZ's future earnings and asset composition. We have kept the ratings on TCNZ on CreditWatch with negative implications. If TCNZ agrees to demerge its fixed-line access network and part of its wholesale division into a new standalone company, it will likely result in a lowering of the long-term rating by one or two notches. On March 18, 2011, Standard&Poor's Ratings Services maintained its 'A' long-term and 'A-1' short-term ratings on Telecom Corp. of New Zealand Ltd. (TCNZ) on CreditWatch with negative implications, where they were placed on Aug. 4, 2010. In our view, there are significant uncertainties surrounding TCNZ's future earnings and asset composition. TCNZ is now in advanced negotiations
