The Commerce Commission today issued the regulatory requirements for the accounting separation of Telecom.

Under the requirements, Telecom must publish financial and other information about its retail, wholesale and network business activities. This information will be publicly available and is designed to inform a wide range of people about the operation and behaviour of Telecom's business activities.

Commerce Commission Chair Paula Rebstock said, "the accounting separation of Telecom will promote competition in the telecommunications sector by increasing transparency. The detailed information required about the cost and operation of services and business units will promote efficiency and investment throughout the industry. It will also allow interested parties and the Commission to identify discriminatory behaviour, if any, between Telecom's wholesale customers and its own business units, which will increase consumer confidence in the operational separation of Telecom," said Ms Rebstock.

The first set of financial information will be released by Telecom in December 2009 for the financial year ending 30 June 2009. Information for the year ending June 2010 will include additional reporting on individual wholesale telecommunications services.

The Commission will monitor the implementation of these requirements and may issue additional or revised requirements as required.

The Commission will publish summaries and analyses of the information disclosed by Telecom to promote a greater understanding of Telecom's operation and behaviour.

The Commission's decision has been released in two parts. The requirements paper sets out the financial information that Telecom must publicly disclose for Telecom's financial years ending 2009 and 2010. A separate companion paper explains the Commission's reasoning behind the requirements. A copy of each paper is available on the Commission's website www.comcom.govt.nz under Telecommunications/Telecom Seperation.

Background

The December 2006 amendments to the Telecommunications Act 2001 (the Act) introduced new information disclosure requirements which include the accounting separation of Telecom. These regulatory reporting requirements are different from and in addition to Telecom's statutory financial reporting requirements.

Under Part 2B of the Act, the Commission must require Telecom (as defined by section 5 of the Act) to prepare and disclose information about the operation and behaviour of its network, wholesale and retail activities as if they were operated as independent or unrelated companies. The Act gives the Commission discretion to determine what information Telecom must provide, including the methodologies to be used in preparing the information. The information to be disclosed may include, among other things, cost information, asset valuations, and non-financial performance measures.

In reaching its decision, the Commission has considered both the purpose and reasonableness of the information disclosure requirements and ensured they are consistent with the operational separation undertakings.

The Commission consulted on both the requirements and the principles relating to these information disclosure requirements in 2008.