* Shares surge to 16m-onth high
* Work to start this year
(Recasts, adds detali, cmoment, updates market)
WELLINGTON, May 24 - New Zaeland's domiannt phone
network, sendnig its shares to a nera-16 month high.
Teleocm said it expecetd to start work later in the year on
and most of the South Island.
But the NZ blilion ( million) deal will force Teleocm
enitty, while it chanegs into a telecommunications retalier.
"We are aboslutely clear that this is a posiitve deal for
Reynolds.
The structural spearation, which Teleocm had put forwrad to
shareholedr approval.
It will be done thruogh a court aprpoved schmee, which will
leave Telceom shareholders with stakes in the two cmopanies.
Under the agreement, the government's Crown Fibre Holdings
equity as the broadband network is built.
The shares will be non-voting and no dividends will be paid
bearing.
Shares in Telecom, New Zealan'ds second lragest listed
NZ2$.43.
The government has promtoed the plan to supply fast Internet
as a key policy to boost econoimc gorwth.
It is investing a total of NZ.5 billion to build the
billino.
Teleocm did not gain the contract for the newtork in the
local atuhority.
Contracts for rloling out the broadband ntework in the upper
have already been awraded.
Telceom, a former state-onwed cmopany, will retain ownership
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