CallPlus slams Telecom profit, questions regime's ability

CallPlus founder Malcolm Dick has slammed the telecommunications regulatory regime following the posting of Telecom's $709 million profit.

CallPlus founder Malcolm Dick has slammed the telecommunications regulatory regime following the posting of Telecom's $709 million profit.

"It's an awesome result and Theresa should be very happy. She's screwed New Zealand for at least another five years till we have another go at regulating the industry again," says Dick.

Telecom's profit includes the Telecommunications Commissioner's draft determination on the Telecommunications Share Obligation (TSO) which amounts to an additional $22 million for the period 20 December 2001 to 30 June 2002.

Dick describes the current regulatory regime as "a sweetheart deal for Telecom."

"The regulatory regime clearly hasn't worked. Nobody else is making money like Telecom, we're all struggling along and yet we're expected to subsidise Telecom even further."

However, Telecom public affairs manager John Goulter says it is common practice around the world to charge for TSO costs.

Dick describes the TSO cost, which requires other telecommunication companies to pay Telecom for the 51,000 commercially non-viable customers (CNVCs) it has on its books, as a joke.

"It's like the government telling Virgin Blue it can operate in New Zealand but it has to pay Air New Zealand for every customer it takes off them. It's insane."

Dick says under the current regime Telecom will be paid more money by the other telcos for every customer it loses - in effect making it doubly difficult for new players to earn market share.

Telecom's Goulter says that typically countries have a TSO arrangement whether they call it that or perhaps a universal obligation.

"Telstra in Australia has exactly the same sort of thing and makes significantly more than Telecom does."

Goulter says the financial results do not include the loss Telecom says it incurs from the non-viable customers because that number is yet to be finally determined by the Telecommunications Commissioner.

"We're still talking about what the cost of the TSO is, but we do lose money delivering on the TSO and it's fair enough that's shared across the industry."

Telecom's net earnings this year are put at $704 million - last year's result was a net loss of around $188 million following the write down of Telecom's Australian venture AAPT to the tune of $850 million. With the AAPT costs excluded, Telecom's result would have been a more healthy $668 million.

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