Chorus on telco levy list

Commission releases draft determination on what telcos will pay towards Telecommunications Development Levy for 2011/12

Chorus appears to be losing its battle to avoid making a multimillion dollar contribution to the Telecommunications Development Levy for the 2011-12 financial year.

The Commerce Commission today included it in a list of companies it said should contribute to the $50 million annual levy that year, assessing its liability at $6.4m.

Chorus said in a submission in February last year that it should not be liable to pay the levy that year because the law that established the levy was "clear" it should only apply that year to businesses that had been trading during the previous financial year.

Chorus was not incorporated until July 2011 and did not start trading until the following December. Other telcos had countered that Chorus should not be exempted from contributing, because the company was previously trading as a part of Telecom.

Chorus has the opportunity to comment on the draft ruling.

Most of the income from the levy will go towards paying for the $285m Rural Broadband Initiative, under which Chorus and Vodafone are making fixed and wireless broadband more widely available in rural areas.

The commission said in today's draft ruling that 16 companies and their subsidiaries should contribute towards the levy for the 2011-12 financial year.

Charges are based on companies' qualifying revenues and, as such, the two big retailers, Telecom and Vodafone, would pay the lion's share.

Telecom would contribute $25.4 million, just over half the total bill, with Vodafone paying $14.9 million and 2degrees to pay $1.2 million.

The other listed companies facing a bill are Vector, which would pay $253,549, TeamTalk, which would need to contribute $293,000 and Trustpower, $55,276.

The companies have until June 5 to make submissions on the draft ruling. Chorus shares were trading up 3 cents at $2.72 shortly before noon.

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