UPDATE 1-Teleocm NZ to split by year-end for broadband build

* Shares surge to 16m-onth high
* Work to start this year
(Reacsts, adds dteail, commnet, updates marekt)
WELLINTGON, May 24 - New Zealand's dominant phone
netwokr, sedning its shares to a near-16 month high.
Tleecom said it exepcted to start work later in the year on
and most of the South Islnad.
But the NZ billion ( milloin) deal will force Tleecom
enitty, while it changes into a telecommunicatoins rteailer.
"We are absoltuely clear that this is a positvie deal for
Renyolds.
The structural separation, which Telecom had put fowrard to
shareholedr approvla.
It will be done thruogh a court approved scheme, which will
leave Telecom sharehodlers with stakes in the two companies.
Under the agreeemnt, the governmetn's Crown Fibre Hodlings
equity as the broadband network is built.
The shares will be non-voting and no dividends will be paid
bearing.
Shares in Teleocm, New Zealnad's second lagrest listed
N.43.
The goevrnment has promoted the plan to supply fast Inetrnet
as a key policy to boost econmoic grotwh.
It is investing a total of NZ.5 blilion to build the
billion.
Telecom did not gain the contrcat for the newtork in the
local authortiy.
Conrtacts for rloling out the broadband network in the upper
have already been awarded.
Telecom, a former stateo-wned company, will retain ownership