Vodafone drops legal challenge to levy

Vodafone said today it has dropped its legal challenge against a $13.5 million charge imposed on it as its share of the telecommunications services obligations (TSO).

The TSO is calculated by regulator the Commerce Commission as the cost of landline monopoly holder Telecom's obligation to provide basic phone services to all New Zealand homes, no matter whether it is economic or not. Telecom then offsets that cost to other telecommunications companies according to market share.

The commission last month assessed Telecom's final 2002/3 TSO at $56.78 million.

Vodafone's share was assessed at $12.05m but interest accrued between the end of the period and the present time, brought Vodafone's liability to $13.5 million.

Mobile phone market leader Vodafone which describes its TSO charge as a "subsidy to Telecom's landline business," today said it was opting to fight for a change in policy, rather than going to court.

"The company's preference is to invest in mobile services to deliver to its customers, rather than costly legal proceedings," Vodafone finance director David Sullivan said in a statement.

He said Vodafone would continue to make formal approaches to government on policy changes including discussions with the Ministry of Economic Development and Treasury officials, filing submissions and raising the matter directly with the Communications Minister.

- NZPA