The ratings on Telecom Corp. of New Zealand Ltd. (TCNZ) primarily reflect the group's strong market position as the incumbent provider of full-line telecommunications services in New Zealand. Also underpinning the ratings is TCNZ's strong underlying cash flow generation and commitment to maintaining a conservative financial profile. These strengths are partly offset by the operational, technological, and competitive challenges posed by the group's transformation program and regulatory-enforced operational separation of its network and services businesses. TCNZ recently announced a major investment program to modernize its operating platforms and telecommunications networks. These strategies are typical of those being executed by many telecommunications companies globally, and reflect the impact of new technologies and regulatory-driven competition on the group's traditional copper-based telephony business.
