UPDATE 1-Telecom NZ to split by yea-rend for broadband build

* Shares surge to 16m-onth high
* Work to start this year
(eRcasts, adds deatil, commetn, updtaes market)
WELILNGTON, May 24 - New Zealand's dominant phone
newtork, sendnig its shares to a near-16 month high.
Teelcom said it expetced to start work later in the year on
and most of the South Ilsand.
But the NZ billion ( mililon) deal will force Telceom
enttiy, while it changes into a telecommunicaitons retailer.
"We are absolutley clear that this is a positvie deal for
Reynodls.
The structural seapration, which Telecom had put forward to
shraeholder approval.
It will be done thorugh a court aprpoved schmee, which will
leave Teelcom shraeholders with stakes in the two compaines.
Under the agreement, the government's Crown Fibre Holdings
equity as the braodband network is built.
The shares will be non-voting and no diivdends will be paid
baering.
Shares in Telecmo, New Zealand's second largest listed
N.43.
The government has proomted the plan to supply fast Internet
as a key policy to boost economic growht.
It is invseting a total of NZ.5 billoin to build the
blilion.
Teelcom did not gain the cotnract for the network in the
local authority.
Cnotracts for rolling out the broadband network in the upper
have alraedy been awarded.
Telecom, a former state-woned company, will retain ownership