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Commonwealth Bank Group to arrange Telecom New Zealand’s Australian Dollar combined Short Term and Medium Term Note Program

6 August 2001

Telecom New Zealand has mandated Commonwealth Bank Group to arrange a combined Short and Medium Term Note program in Australian capital markets to assist in funding the operations of the Telecom Group in Australia.

A Telecom New Zealand investor roadshow is planned to start on 22 August in Sydney, following finalisation of documentation and the release of the Group’s Annual Results.

In announcing the program today, Telecom’s General Manager Finance, Pat Duignan, said the Australian capital market was very efficient, and able to deliver attractive funding for the Group’s existing operations.

"The move into the Australian capital market follows Telecom New Zealand’s full takeover of Australian carrier AAPT in 2000," said Mr Duignan. "The acquisition of AAPT has been of strategic importance to our expansion plans in Australia.

"Telecom New Zealand has a strong credit story, and is rated by Standard & Poor’s at A+ long term and A-1 Short Term, an equivalent level to Telstra. Moody’s rates Telecom as A1 Long Term, P1 Short Term. Both Moody’s and Standard & Poor’s have assessed Telecom’s ratings outlook as stable."

Wayne Hoy, Commonwealth Bank Group’s Global Head of Corporate Sales, said the Australian debt market will welcome bonds (or notes) issued by Telecom New Zealand.

"The sector has significant capacity and the new name offers diversification benefits for the market. Telco issues are typically liquid with established yield curves and credit differentiation. These factors make them attractive to domestic and offshore investors in the Australian dollar market," Mr Hoy said.

The Short and Medium Term Note Program has been structured with the Australian branch of TCNZ Finance Limited as the issuing entity. The program will be guaranteed by Telecom New Zealand and various key operating entities within the Group.

Mr Duignan said AAPT’s commercial paper would be retired over time as commercial paper issues by TCNZ Finance – Australian Branch were phased in, with the new program becoming the single capital markets borrowing vehicle for the Group in the Australian Market.

"The program size has been set at A$1.5 billion to provide for both short term note issuance and medium term note (bond) issues.

"The covenants and various terms and conditions included in the Program documents will mirror those contained in Telecom’s Euro documentation. This ensures that investors in various jurisdictions are treated on an equal footing," said Mr Duignan.

The Dealer Group is currently being finalised.

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