Telecom’s subsidies NZD100 million below estimates

30 Jun 2003

Telstra Clear and Vodafone [NYSE:VOD] have been told by the New Zealand Commerce Commission that they will have to pay less to Telecom Corp New Zealand [NYSE:NZT], to cover the costs of subsidies to phone users. Competitors of the incumbent operate in 20% of the market and are therefore required to pay a proportionate amount of the Telecommunication Service Obligations (TSO) costs. The TSO agreement was established when the sector was privatised in 1990 and gives the government the power to set standards for the industry. It was updated last year and includes service quality benchmarks for connecting calls, emergency services, free local residential calls and upgrading internet data speeds. The total TSO cost is now estimated to be NZD73.4 million – NZD100 million lower than originally calculated – around NZD15 million of which will be contributed by the competitors.

New Zealand