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NZ Telecom in Mobile Services Deal with Telstra

Telecom Corp., New Zealand's dominant phone provider, said on Monday it would allow rival TelstraClear to offer a mobile phone service over its network. The deal comes as the competition regulator proposes tougher rules to force mobile companies to share infrastructure, after an investigation into why New Zealand has only two operators -- Telecom and the local subsidiary of British mobile company Vodafone Group.

TelstraClear, the local subsidiary of Australia's Telstra Corp., is New Zealand's second largest provider of fixed line phone and Internet services, but currently has no mobile offering.

"Our customers can look forward to a unique TelstraClear service, with new TelstraClear branded handsets, bundles and pricing plans that are different to those offered by other players today," Chief Executive Allan Freeth said, adding the service would launch at the end of the year.

TelstraClear previously offered mobile services through Vodafone to around 30,000 consumers, an arrangement which lapsed in June, with TelstraClear reportedly unhappy with the low margins offered by Vodafone.

Vodafone has around 53% of the mobile market with 2.26 million customers, against Telecom's 47% share. There is on average about one phone for every person in New Zealand.

In April, TelstraClear abandoned a NZ$50 million (US$37.3 million) pilot mobile network planned for the North Island city of Tauranga, saying it could not reach an agreement which would have allowed its customers to get nationwide coverage through Vodafone's network.

In June Telecom announced plans to spend NZ$300 million building a new mobile network, as it faced losing customers to Vodafone's more popular technology.

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