The Commerce Commission today issued a draft paper on the regulatory reporting requirements for the accounting separation of Telecom. The draft paper outlines the financial information that Telecom must provide and the conditions it must follow when preparing this information.

Under these requirements, Telecom will be required to prepare financial and other information about its retail, wholesale, access, corporate and international business activities. This information will be publicly available and is designed to inform a wide audience about the operation and behaviour of Telecom's business activities.

Commission Chair Paula Rebstock said, "This regulatory reporting will be a significant step in improving transparency for the telecommunications industry. It will assist with identifying any cross-subsidies and supporting non-discrimination between Telecom's wholesale customers and its own retail group. In doing so it will complement the reporting required by the operational separation undertakings."

Under the draft paper, July 2008 to June 2009 will be a transitional year with the first set of financial information released in the second half of 2009. Full regulatory financial reporting will apply for the year July 2009 to June 2010.

A copy of the draft paper is available on the Commission's website www.comcom.govt.nz under Accounting Separation of Telecom - Consultation Process.

Interested parties are invited to make submissions on the draft paper. Submissions received will be posted on the Commission's website. Interested parties are asked to indicate any confidentiality requirements at the time of their submission. The Commission anticipates that it will release a final version of the paper in November 2008.

Submissions can be made in writing to:

Accounting Separation of Telecom Project,
Commerce Commission,
PO Box 2351,
Wellington, 6140

or by email to AccSepProject@comcom.govt.nz by 5 pm on Friday 7 November 2008.

 

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 the statutory financial reporting requirements and cover the reporting of many financial aspects of the operational separation of Telecom.

Under Part 2B of the Act, Telecom is required to prepare and disclose such information which the Commission requires as if any of Telecom's network, wholesale and retail activities were operated as independent or unrelated companies. The Act grants the Commission discretion to determine what information Telecom will be required to provide and the methodologies to be used in preparing it. This includes the discretion to request other forms of information such as cost information, asset valuations, non-financial information and information about certain other business activities.

This information which will be publicly available is intended to inform a wide audience about the relevant Telecom business activities, and will provide improved transparency, identify any cross-subsidies and encourage non-discrimination. In doing so it will complement the non-financial reporting required by the operational separation undertakings.

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

The operational separation undertakings required Telecom to prepare a Statement of Assets controlled by Chorus as at 1 July 2008 which is a separate requirement to the Accounting Separation requirements.