Telecom says the Government's rural broadband plans will cost it up to $56 million a year in earnings between 2011 and 2013.
The Government said today that proposals for the roll-out of high speed broadband in rural areas had been signed off and it was expected work would get under way on infrastructure from early next year.
In a brief announcement to the stock exchange, Telecom said that if the plans were enacted in the current form, Telecom's ebitda (earnings before interest, tax, depreciation and amortisation) guidance for each of the 2011, 2012 and 2013 financial years would be adversely impacted by up to $56m.
Communications and Information Technology Minister Steven Joyce said under the plan, 97 percent of rural households would get access to broadband services of at least 5Mbps, and the remainder would have speeds of at least 1Mbps.
"For many remote and not-so-remote rural areas this will be light years ahead of where they are today," he said.
The Government has also finalised plans involving reform of the Telecommunications Service Obligations (TSO), involving compensation to Telecom for supplying local telephone services in commercially non-viable areas. No increase in line rental charges was expected.
Telecom shares were down 1c to 220 in late morning trading.
