Telecom NZ, Vodafone settle row over new network

WELLINGTON Wed May 6, 2009 6:27pm EDT

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WELLINGTON May 7 (Reuters) - Vodafone (VOD.L) has agreed to drop legal proceedings against Telecom Corp TEL.NZ, New Zealand's largest listed company, after Telecom said it would tackle technical issues which caused its new mobile network to interfere with Vodafone's service.

Telecom said the agreement meant the new network could get into operation by the end of the month. Vodafone had started legal action to stop an original May 13 launch date, saying interference from the network was affecting the ability of its own customers to make phone calls.

"Telecom has agreed to extend its network filter installation programme, in order to help resolve the interference issues identified as impacting Vodafone mobile customers," Telecom said in a statement.

The NZ$574 million ($336 million) network, which Telecom has branded "XT", uses GSM-based technology similar to Vodafone's, while its existing network uses the less-common CDMA technology.

Telecom and Vodafone, a subsidiary of the British-based mobile giant Vodafone Plc, dominate the mobile market in New Zealand while Telecom also competes against a unit of Australia's dominant phone company, Telstra (TLS.AX) in fixed line phone services.

Shares in Telecom were down 5 cents to NZ$2.78 in early Thursday trade. So far this year the stock has gained 21 percent against a 4 percent rise in the benchmark NZSX-50 index .NZ50. ($1=NZ$1.71)

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