Analysis Report Of Telecom’s 2009 Statements

Summary And Analysis Report Of Telecom’s 2009 Regulatory Financial Statements Published

The Commerce Commission today published its summary and analysis of Telecom Corporation of New Zealand Limited’s first regulatory financial statements for the financial year ending 30 June 2009.

Under requirements issued by the Commission under Part 2B of the Telecommunications Act 2001, Telecom must publish financial and other information about its network, wholesale and retail business activities and services, which is intended to provide useful information to industry stakeholders about the operation and behaviour of Telecom. “The requirements for regulatory reporting differ from Telecom’s statutory reporting, such as its annual report, as regulatory reporting uses economic and accounting methodologies, which are different from those used for statutory reporting,” said Dr Ross Patterson, Telecommunications Commissioner. “The regulatory financial statements include detailed reports about each of Telecom’s different services groups (which generally align with Telecom’s Chorus, Telecom Wholesale and Telecom Retail operational business units), prepared as if they were independent and unrelated entities.”

“The Commission acknowledges Telecom’s work in producing its first regulatory financial statements on both a historical cost and current cost accounting basis, which was a lengthy and complex task. However, the initial regulatory financial statements have raised issues about the methodologies used in the preparation of this information. The Commission has always regarded

the first year of regulatory reporting as a transition year and has highlighted areas where a re-working of the reporting requirements, particularly in relation to the attribution of income and expenses and valuation of Telecom’s fixed assets, is likely to be necessary,” said Dr Patterson.

The Commission has therefore reviewed Telecom’s regulatory financial reporting requirements and is now consulting on proposed changes to those requirements. Following consultation with the industry, the Commission will issue any necessary revisions to the requirements for 2010.

Both the Commission’s summary and analysis report for the 2009 financial year and its consultation document on the proposed changes to the requirements are available on the Commission’s website www.comcom.govt.nz under Industry Regulation/Telecommunications/Accounting Separation

ENDS

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