Vodafone to invest in New Zealand

WELLINGTON (Reuters) - The New Zealand arm of mobile phone company Vodafone Group (VOD.L) said on Friday it would spend NZ$50 million (19.3 million pounds) to provide fixed line phone services to a quarter of the country's population.

In a challenge to incumbent phone provider Telecom (TEL.NZ), Vodafone said it would use recent government changes that have forced Telecom to open its network to competitors.

Vodafone will put its own equipment into Telecom's phone exchanges so it can offer phone and Internet services using Telecom's copper line phone network.

Vodafone said by October 2008 it would be able to provide fixed line services to all of Auckland, New Zealand's largest city, which has about a quarter of the 4 million population. Expansion nationally would follow.

Shares in Telecom, New Zealand's largest listed company and a former state-owned monopoly, last traded down 1.5 percent at NZ$3.85, in a broader market .NZ50 down 0.3 percent.

Telecom has also been forced by the government to split into three operating units in a bid to get faster, cheaper Internet services in the country.

Vodafone is Telecom's main competitor for mobile services while the local unit of Australia's Telstra Corp (TLS.AX) competes in fixed line phone services. (Reporting by Adrian Bathgate)