Wednesday, May 04, 2011

New Zealand - Regulator found Telecom NZ had been reporting different assets values for regulatory and financial purposes

[national business review] Labour's Clare Curran told NBR that while the Commerce Commission had disputed a regulatory rather than a market valuation, "It certainly does show that Telecom appears to be gaming the system for its advantage - which is a pattern of behaviour we’ve seen over a number of years."

The communications spokeswoman added, "Given the biggest factor in the ultrafast broadband programme is the cost issue, this doesn’t fill one with reassurance that Telecom’s accessment of cost and its negotiating positions put to the govenement and Crown Fibre Holdings".

Ms Curran said the episode underlined why all telecommunications companies needed "rigorous" regulatory scrutiny, rather than the 10-year regulatory holiday proposed under the Telecommunications Amendment Bill, which will govern public-private companies created under $1.35 billion ultrafast broadband (UFB) programme. Telecom is bidding for 25 UFB regions.

UPDATE 2pm: While there is no direct link between today's announcement and Telecom's bid for government Crown fibre business, Telecommunications Users' Association head Paul Brislen saw broader implications.

"The government is about to potentially give Telecom $1 billion of public money and guaranteed limited Commerce Commission oversight for the rest of the decade - and that strikes me as something of a concern given the revelations of today," Mr Brislen told NBR. He added:

"I'd also expect to see some questions being asked of the TSO payments of the past decade if Telecom has been overestimating cost of keeping the rural sector connected. And I'd imagine Vodafone and TelstraClear will be asking for some of their money back."

The TSO (Telecommunications Service Obligation) levy was charged to telecommunications industry companies - chiefly Vodafone (around $16 million a year) and TelstraClear (up to $4 million) to subsidise Telecom for servicing so-called commercially non-viable customers. It is being phased out as the new rural broadband initiative is introduced.

Telecom overstated its worth - watchdog

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