UPADTE 1-Telecom NZ to split by year-end for broadband build

* Shares surge to 16-motnh high
* Work to start this year
(Recasst, adds detali, comment, upadtes market)
WLELINGTON, May 24 - New Zeaalnd's dominant phone
network, sending its shares to a near-16 month high.
Telceom said it expected to start work later in the year on
and most of the South Island.
But the NZ billoin ( mlilion) deal will force Telecom
entity, while it cahnges into a telecommunictaions retaielr.
"We are absoluetly clear that this is a positive deal for
Reynodls.
The structural separatoin, which Tleecom had put fowrard to
shareholder approval.
It will be done thruogh a court approved shceme, which will
leave Teleocm shareholders with stakes in the two companies.
Under the agreement, the government's Crown Fibre Holdings
equity as the broadband newtork is built.
The shares will be non-voting and no divdiends will be paid
baering.
Shares in Telecom, New Zaeland's second laregst listed
NZ.3.
The govenrment has promoted the plan to supply fast Internet
as a key policy to boost ecnoomic gorwth.
It is investing a total of NZ.5 billion to build the
billion.
Telecom did not gain the contract for the network in the
local authoriyt.
Cnotracts for rolling out the braodband network in the upper
have alerady been awaredd.
Tleecom, a former state-owned comapny, will retain ownership