New TSO figure from Telecom could be half original estimate

Telecom has come up with not one but two new versions of the cost of providing local residential telephone services under the telecommunications service obligation (TSO).

Telecom has come up with not one but two new versions of the cost of providing local residential telephone services under the telecommunications service obligation (TSO).

Telecom was asked by the Commerce Commission to rework its figures after releasing an initial figure of $226.5 million for the six month period ending in 30 June this year.

Telecom now says the cost for the full year has reduced from $425 million to $408 million, mostly due to changes it has made to the cost of raising capital, which Telecom has set the cost at 13.2%.

However, it has told the commission that reducing the cost of capital by to 8.2% would reduce the TSO loss calculation to $210 million.

Commission manager for the network access group, Osmond Borthwick, says the commission specified the lower costing of 8.2%.

Borthwick also says it did not specifically ask Telecom to re-work the cost of raising capital.

"That wasn't one of our requirements specified to Telecom under the act."

The commission is holding an industry workshop today to outline its proposed approach to the TSO model it will use to reach its own version of the figure. The commission hopes to release a draft ruling on the TSO cost and how it will be apportioned to the industry players early next year.

Telecom's government relations manager Bruce Parkes was not immediately available for comment.

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