AAPT doing it tough, says Telecom NZ

Stuart Corner
Friday, 02 February 2007 03:42

IT Industry - Deals

Things are also tough in New Zealand, Telecom is facing a major government-mandated operational separation regime (much tougher than that imposed on Telstra). Telecom's original proposed model of operational separation would have operationally separated the retail business units from the network and wholesale units, and reinforced the separation with legally binding undertakings, independent and auditable oversight, and other structural changes designed to support non-discriminatory treatment of competitors.

However, in legislation finalised in December 2006, the Government mandated a more onerous form of operational separation requiring the creation of a separate business unit to operate the fixed line access network in order to provide services to both Telecom's retail units and its competitors.

Telecom said it expects these operational separation requirements to be costly to implement and currently estimates that these requirements may result in additional operating expenditure of $NZ10-$NZ20 million and additional capital expenditure of $NZ20-$NZ40 million in the 2007-08 financial year. It currently estimates that operating expenditure of approximately $NZ10 million will be incurred in respect of operational separation in 2006- 07.