Telecom Corp of New Zealand said on Friday it had signed a NZ$130 million ($98 million) deal with France's Alcatel-Lucent to build a new Internet Protocol (IP) phone network, sending its shares higher.

Telecom said the network would be completed in December 2009 and would allow voice, data and mobile services to run over one phone system.

The company had pledged to build an IP-based network to meet its obligations under the new government regulations, which also force Telecom to split into three separate operating units and open its phone network to competitors to use.

"Over time this significant investment in New Zealand's telecommunications infrastructure will allow the development of world leading products that allow our customers to enjoy the very best in voice, video and application services," Telecom's chief transformation office Frank Mount said in a statement.

Shares in Telecom, a former state-owned monopoly and New Zealand largest listed company, last traded up 2.4 percent at NZ$3.36, gaining 6 cents on the news, in a broader market .NZ50 up 1.4 percent.

The stock hit a 15-year low of NZ$3.25 on Thursday. Telecom's shares have come under pressure as earnings from its traditional fixed line calling business decline and competitors invest heavily to try and grab market share.

Alcatel-Lucent already manages Telecom's fixed line and mobile phone networks.

Telecom, which has operations in New Zealand and Australia, competes in the domestic market with TelstraClear, a division of Telstra Corp and a local unit of British mobile phone giant Vodafone. (NZ$1=$1.32)

Source:Reuters