Vodafone and Telecom today said they had submitted a joint bid for the government's Rural Broadband Initiative (RBI).
Resources would be combined to build a new rural network infrastructure using a range of technologies, which would eventually provide broadband access to 97% of rural schools and 5Mbits/s connections to 80% of rural households.
“This solution sees New Zealand’s two largest telecommunications providers combining their extensive resources and skills to bring the benefits of high speed broadband to rural communities as quickly as possible,” Telecom CEO Paul Reynolds said in a statement.
He said rural broadband access was important because so much of the nation's wealth is generated in small rural communities.
Reynolds believed the collaboration showed the companies were working "for the good of New Zealand".
Vodafone CEO Russell Stanners said the companies aimed to provide the "best technology fit" for the New Zealand taxpayer.
Building new cell sites would also allow for the expansion of mobile services, he said.
The companies said they remain open to future collaboration on rural broadband with other parties.
Russell Stanners said today that Vodafone and Telecom were "embracing competition" by creating a fully open access network.
Telecom spokesperson Mark Ratcliffe said that the partnership was the "next step" in a strong relationship between the two companies.
"This needs the strongest team in New Zealand working together," he said.
"A collaboration enjoys the fastest possible start."
The joint venture came as a surprise to many, and Stanners admitted that relations between the two companies was not always so friendly.
"We are complete rivals in the retail market," he said.
"What we're talking about here is infrastructure."
Ratcliffe said the companies could not see any advantage in making separate bids for the RBI.
Both Stanners and Ratcliffe refused to say how much of an investment the companies were making in the infrastructure. They also would not say how the investment was split between the two companies.
Ratcliffe said there were no plans to announce any numbers.