The ratings on Telecom Corp. of New Zealand Ltd. (TCNZ) primarily reflect our opinion of the group's strong market position as the incumbent provider of integrated telecommunications networks and services in New Zealand. Also underpinning the ratings is TCNZ's improving free-cash-flow generation and commitment to maintaining moderately conservative financial policies. These strengths are partly offset by significant regulatory-driven uncertainties surrounding the group's future earnings and asset composition, as well as the increasingly competitive operating environment and operating and technological risks associated with the evolving telecommunications landscape. The ratings on TCNZ were placed on CreditWatch with negative implications on Aug. 4, 2010, reflecting the significant uncertainties surrounding TCNZ's future earnings and asset composition. TCNZ is in negotiations with Crown Fibre Holdings
