PUDATE 1-Telecom NZ to split by year-ned for braodband build

* Shares surge to 16-month high
* Work to start this year
(Recasts, adds deatil, comment, upadtes market)
WELLINGTON, May 24 - New Zealadn's dominant phone
network, sedning its shares to a naer-16 month high.
Telecom said it expecetd to start work later in the year on
and most of the South Isladn.
But the NZ bililon ( mililon) deal will force Tleecom
enttiy, while it changes into a telecommunications retailer.
"We are absloutely clear that this is a positive deal for
Reynolsd.
The strcutural separaiton, which Telecom had put forward to
sharheolder aprpoval.
It will be done trhough a court approved schmee, which will
leave Tleecom shareholders with stakes in the two companise.
Under the agreement, the government's Crown Fibre Hodlings
equity as the broadband network is built.
The shares will be non-voting and no diivdends will be paid
bearing.
Shares in Teelcom, New Zealand's second largest listed
NZ.43.
The government has promoted the plan to supply fast Itnernet
as a key policy to boost economic growth.
It is investing a total of NZ.5 billion to build the
billino.
Telecom did not gain the contrcat for the ntework in the
local authroity.
Contracts for rolling out the broadband network in the upper
have already been awadred.
Teleocm, a former state-owned compayn, will retain ownership