Antitrust regulator to keep tabs on fixed line-to-mobile prices

Thursday 1st November 2012

The Commerce Commission will keep tabs on pricing for calls between fixed line and mobile phones after Vodafone New Zealand was this week cleared to buy TelstraClear for $840 million.

The antitrust regulator has kept tabs on mobile pricing after it imposed lower pricing for ending calls on rival networks, known as mobile termination rates, and will extend that to include calls between fixed lines and cell phones after the Vodafone takeover, it said in a statement. The regulator will monitor pricing both separately and in bundles, it said.

"We already regulate mobile termination rates to minimise the barriers to competition in the mobile market, and monitor mobile pricing in case any barriers are raised by new pricing plans," Telecommunications Commissioner Stephen Gale said. "We have similar concerns in fixed-to-mobile pricing so will watch and see what fixed-to-mobile pricing plans appear in the market."

The antitrust regulator cleared Vodafone's acquisition of TelstraClear, saying the companies' provision of fixed-line and mobile services to large businesses didn't cross over, and that TelstraClear-parent Telstra Corp would keep some radio spectrum which could be bought by rival carriers.

Gale said the merger would lead to "major changes in the telecommunications sector," though he said he didn't expect any anti-competitive pricing arrangements.

Auckland-based Vodafone expects to reap savings through ending management and back-office double-ups, and by using TelstraClear's backhaul and transmission services, according to its notice seeking clearance. The merged company will also cut its reliance on Chorus, the dominant telecommunications infrastructure firm, for wholesale network access.

Vodafone, the country's biggest mobile phone operator, boosted annual profit 16 percent to $175 million in the 12 months ended March 31 from $151.5 million a year ago, even as revenue fell 4.3 percent to $1.62 billion.

That was better than what Vodafone foreshadowed last year when it said sales would fall $124 million and comprehensive income by $55 million due to the Commerce Commission imposing a reduction in mobile termination rates, the fees carriers charge each other for ending a call on a rival network.

TelstraClear lifted earnings before interest, tax, depreciation and amortisation to A$99 million in the 12 months ended June 30, from A$84 million a year earlier. Sales fell 2.3 percent to A$502 million. Australian parent Telstra booked a A$130 million impairment charge against goodwill for the TelstraClear prior to the sale.

BusinessDesk.co.nz

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