BREAKING NEWS: XtraMSN pact sealed with Microsoft's $300m investment in Telecom

Microsoft has invested $NZ300m in Telecom as part of a plan to unite the Xtra and MSN internet portals in New Zealand.

The new joint portal, to be branded XtraMSN, promises additional resources for Xtra - and for Microsoft a way out of the policy of having MSN in New Zealand managed by the Australian joint venture, NineMSN, which has devoted relatively little energy to its trans-Tasman responsibilities.

Xtra will manage the operation, development and marketing of the new consumer portal. MSN services including MSN Hotmail, MSN Messenger, MSN Communities and MSN Search will combine with Xtras news and information channels.

Microsoft says it will take up NZ$300 million in convertible notes issued by Telecom. The new securities, with a seven-year maturity, may be converted to ordinary shares by Microsoft.

Telecom CEO Theresa Gattung described the new portal and associated investment by Microsoft as a significant development in the New Zealand communications market.

"To remain competitive in the fast evolving online communications market, we must continue to innovate and offer customers additional value. Our new relationship with MSN will ensure customers enjoy new online services and products straight from the Internet technology leader.

"Microsoft's technology contribution to the new portal and their $300 million investment in Telecom is an encouraging endorsement of our ongoing growth strategy."

Microsoft chairman and chief software architect Bill Gates declazred himself "pleased we have this great opportunity to extend our investment in New Zealand. The initiatives that Microsoft New Zealand is working on with the government and our other local partners will create growth opportunities for the country's entire technology industry."