Two new players hit by $50m telco tax, another escapes

Voyager founder Seeby Woodhouse: growing revenue sees his company caught in the Telecommunications Development Levy net. Photo / Doug Sherring

Voyager and MyRepublic will have to pay a share of a $50 million telco industry tax this year, while the Crown-owned Reannz has managed to wriggle out of the net.

The Commerce Commission this morning released its draft determination on which telcos will pay what share of the $50m Telecommunications Development Levy for the 2018 financial year.

Telcos chip in based on their market share.

The government uses the proceeds to help fund its share Rural Broadband Initiative and other public-private fast internet initiatives.

As usual, Spark ($17.4m), Vodafone ($13.3m), Chorus ($10.9m) and 2degrees ($4.3m) are required to pay the lion's share of levy payments.

This year they are joined by two relative newcomers to the market pass: Voyager, owned by entrepreneur Seeby Woodhouse (who made his original fortune through Orcon, now part of Vocus) and the Singapore-owned My Republic.

The ComCom says it has Voyager and MyRepublic both passed the threshold of $10m revenue in 2018, which makes them liable to pay a modest share of the $50m levy (although under a complex formula, not all of their revenue was included in the regulator's calculations). Voyager will chip in $106,000, My Republic, $38,000.

Reannz will no longer be liable following a High Court decision that it operates a private, not public, telecommunications network.

The Crown-owned agency runs a broadband network for universities and research institutes. It recently hit controversy when funding cuts by the outgoing National-led government led Reannz to raise its rates - and three universities (Victoria, Canterbury and Lincoln) rebelled and said they would turn to private-sector internet service providers.

Telcos' share of the $50m Telecommunications Levy for 2018. Source / Commerce Commission.

The Telecommunications Development Levy was originally due to be scaled back to $10m from 2017. However, the National-led government extended it at $50m for another two years to help pay for the Rural Broadband Initiative 2 (RBI 2), an extension of rural broadband coverage over the original scheme.

Spark, Vodafone and 2degrees won the RBI 2 contract with a joint bid, making the telco levy a bit of a money-go-round for them as TDL payments return to their pockets as the government pays its share of the public-private rural broadband rollout.