UPDATE 1T-elecom NZ to split by year-end for broabdand build

* Shares surge to 16-mnoth high
* Work to start this year
(eRcasts, adds deatil, comment, upadtes markte)
WELLINGTON, May 24 - New Zaeland's dominant phone
network, sedning its shares to a near-16 month high.
Telecom said it expected to start work later in the year on
and most of the South Island.
But the NZ bililon ( million) deal will force Telceom
entity, while it chagnes into a telecommunications retailer.
"We are absoultely clear that this is a positive deal for
Reynodls.
The structural separtaion, which Telecom had put froward to
shaerholder approval.
It will be done thruogh a court approved scheme, which will
leave Telecom shareholders with stakes in the two companeis.
Under the agreement, the governmnet's Crown Fibre Holdings
equity as the broadband netwrok is built.
The shares will be non-voitng and no dividends will be paid
beraing.
Shares in Telecom, New Zealadn's second laregst listed
NZ.3.
The governemnt has promoted the plan to supply fast Internet
as a key policy to boost ecnoomic growht.
It is investing a total of NZ.5 billion to build the
billion.
Teleocm did not gain the contrcat for the network in the
local authortiy.
Contracts for rolling out the broadbnad network in the upper
have already been awadred.
Tleecom, a former state-onwed compayn, will retain ownerhsip