The 'A-/A-2' ratings on Telecom Corp. of New Zealand (TCNZ) reflect our opinion of the group's "modest" financial risk profile, strong free cash flow generation, and "satisfactory" business risk profile as the largest provider of telecommunications products and services in New Zealand. Offsetting these strengths are the intensifying competitive environment in fixed and mobile telecommunications services in New Zealand, and the execution risks associated with delivering new products, technologies, and cost-reduction initiatives. On Dec. 1 2011, TCNZ completed the demerger of its fixed-line access network and related infrastructure to a separate listed company, Chorus Ltd. (BBB/Stable/A-2). TCNZ is the second-largest mobile retailer and network services provider in New Zealand. In our view, TCNZ's existing market position and the quality of
