TCNZ intends to demerge its fixed-line access business Chorus in late 2011, subject to shareholder and various other approvals. We have undertaken an assessment of TCNZ's proposed asset composition and financial profile following the demerger. Based on this assessment, we expect to lower the ratings on TCNZ by one notch to 'A-/A-2' from 'A/A-1' if the demerger proceeds as planned. The ratings remain on CreditWatch with negative implications pending shareholder and other approvals for the demerger. On Aug. 31, 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 initially placed on Aug. 4, 2010. This CreditWatch update follows our
