Econet calls for further Telecom resignations to demonstrate genuine commitment to change

Econet Wireless New Zealand (Econet) has welcomed the early resignation of Telecom Chairman as good news for consumers and for competition in telecommunications. However, Econet believes further resignations amongst the board and senior executives, including the CEO, are essential if there is to be any confidence in the commitment promised by Telecom on Friday to change it business behaviour.

“Econet is delighted with the decision to unbundle the local loop, and encouraged by the Chairman’s resignation. But, we have we have read Telecom’s ‘new direction’ statement with a lot of caution given the company’s track record and the CEO’s recent speech condoning the confusion of customers to keep margins high. There is a long way to go before Telecom can be trusted in any commercial negotiation with competitors,” says Tex Edwards, Chief Project Director, Econet Wireless New Zealand.

Econet itself has been seeking to become a wholesale ‘cell site co-location’ customer of Telecom’s for several years. We have spent some $6 million preparing for negotiations with Telecom, only to be continually delayed and postponed through self regulatory confusion and delay.

“We have already been told by Telecom executives on countless occasions that ‘the attitude has changed’. Yet, they continue to play the same old games.

“It costs new entrants millions of dollars on engineering feasibility studies, analysis and legal advice just to participate in negotiations – only for the process to be forever stalled and clouded by Telecom. There is no better example than Econet’s attempts to secure cell site co-location,” says Edwards.

The Chairman’s legacy is not just the New Zealand consumers’ subsidy of massive AAPT losses or Telecom’s loss of 66% of the mobile market to GSM monopolist, Vodafone. It is also the legacy of environmental disaster due to the proliferation of cell sites in New Zealand.

“Telecom’s failure to allow, Bell South, Vodafone, Clear or Whoosh onto its cell sites – many of which were acquired via compulsory acquisition prior to the RMA - has left New Zealand littered with unnecessary cell tower eyesores.

“It is shameful that Telecom now expects new entrants to pay for the costs of cleaning up the environmental mess Telecom created in its attempts to foil competition. Econet is unwilling to commence large scale roll out of its network before an environmentally sensible co-location protocol is confirmed.

“Telecom’s entrenched mentality and determination to obstruct competition at all costs was clearly illustrated earlier this year by a Telecom board member’s description of new entrants’ infrastructure share aspirations as ‘parasitical’. New entrants are willing to pay commercial wholesale rates for normal infrastructure access in line with OECD precedent.

“The Government’s unbundling decision should surprise nobody. Indeed, it has only been through a clear strategy of delay and confusion that Telecom has foiled competition and regulatory intervention for so long,” says Edwards.

When Telecom was privatized in 1991 a risk warning was inserted in both the IPO documents and the notes to financial statements. Subsequently their have been annual warnings in Telecom’s SEC filings about regulatory change.

“Econet strongly encourages the major United States and Australian institutional shareholders including Brandes, Capital and Templeton, and AMP to call for further resignations in order to demonstrate Telecom’s genuine commitment to change,” concludes Edwards.

Ends

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