Bill unlikely to affect Kiwi Share

By PETER GRIFFIN

Telecom has shaved more than $11 million from the estimated cost of meeting its Kiwi Share obligation, but claims a new loss-calculating method proposed in the Telecommunications Bill will have little influence on future loss estimates.

The telco estimates that providing free local calls in unprofitable, mainly rural areas costs $174.3 million a year, down from a previous estimate of $185.6 million.

That equates to a $37-a-month shortfall for each of Telecom's 391,000 loss-making residential customers, down from an unprofitable total of 471,000 customers in the March estimate.

But Telecom's general manager of government and industry relations, Bruce Parkes, said that did not mean tens of thousands of Telecom customers had all of a sudden become profitable to reach.

"There are a whole lot of customers who are right on the cusp of falling in or out of being profitable or not," he said.

Telecom is not required to include indirect revenues, such as second lines and Xtra internet services, in its Kiwi Share calculations, something that has irked rival telcos, who claim Telecom's calculated loss would be substantially reduced if they were factored in.

But Mr Parkes said that even with Xtra revenues included, the burden on the company of meeting its Kiwi Share obligations would not be reduced.

"We would probably come up with a very similar figure," he said.

Clear spokesman Kevin Millar said the new estimate was meaningless if based on the same criteria Telecom used in coming to previous figures. Clear has estimated that Telecom could even make a profit fulfilling its Kiwi Share obligations if indirect revenues were included.

While the country's telcos have long argued over the methodology used in calculating the KSO, others just want more openness.

Ernie Newman, chief executive of the Telecommunications Users Association, said the figures bandied about by Telecom and its rivals were irrelevant until a transparent process was in place for calculating the losses.

Communications Minister Paul Swain is optimistic that the bill, now awaiting its second reading in Parliament, could be passed this year.

Among reasons Telecom gave for a reduction in its Kiwi Share obligation loss were: an appreciation of the NZ dollar, particularly against the yen, in the six months to June, a reduction in interconnect payments with other telcos and reduced operating costs.