Telecom's Reynolds calls for review of rules

Friday 2nd October 2009

Telecom Corp. chief executive Paul Reynolds, battling increased government controls of his business, has called for a review process for telecommunications regulation, putting it in sync with the energy industry.

Reynolds told shareholders at their annual meeting yesterday that New Zealand should adopt a merits review for telecommunications, introducing independent scrutiny of proposed regulation to ensure “high quality decision-making.”

“Telecom has to get it right, and has to be allowed to get it right,” Reynolds told shareholders. “Introducing a process for merits review under the banner of the Telecommunications Act is one such balancing force that could be applied with beneficial effect.”

The nation’s biggest phone company was forced to split its retail, wholesale and network businesses by the previous Labour-led administration to speed up the process of local-loop unbundling and improve internet services. Since then Telecom has changed out its senior executives and John Key’s government has taken power.

Under Reynolds’ watch, Telecom has had its pitch to partner with government in rolling out ultra-fast broadband through the country turned down, lost its net gain from providing basic services to isolated customers and, along with rival Vodafone New Zealand, is waiting for a final decision on pricing for terminating calls on other networks.

The company’s stock gained 1.5% to $2.70 and is up 16% this year. In the past 10 years, Telecom has shed almost two thirds of its market value.

Reynolds said easing the weight of regulatory control would enable Telecom to invest more into New Zealand’s economy. The company spent about $2.3 billion on capital expenditure over the past two years, and Reynolds earmarked another $1.1 billion this year.

The European Union operates a merits review for its telecommunications sector, as does the gas and electricity sectors in Australia and energy in New Zealand, and introducing the communications industry would align with international best practice, Reynolds said.

The absence of telecommunications “looks anomalous, and it is a vital protection for shareholder interests,” he said.

Reynolds said he was encouraged by the Commerce Commission’s announcement last week that it would dump rules that have been superseded in the telecommunications sector.

Businesswire.co.nz

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