Telecom(Strategic 100 2010)
- 18 January, 2011 22:00
Global leader: Paul Reynolds, CEO
Core activity: Telecommunications & ICT services provider
Revenue: NZ$5.27 billion (FY 2009 to 2010, ended 30 June, 2010)
Key customers: Vodafone, TelstraClear, Orcon
A significant focus for the telecommunications provider continues to be the demerger of Telecom’s business units. A variation of the company’s operational separation undertakings was approved in October by Steven Joyce, Communication and Information Technology Minister. The minister said the approved changes are in the best interests of consumers and to allow Telecom to develop services and systems consistent with changes from the government’s ultra-fast broadband initiative.
Telecom’s proposal to structurally separate has drawn criticism from its competitors, specifically around the expected relationship between the regulation of copper and the regulation of fibre, and an anticipated lack of consistency. If Telecom cannot effectively and efficiently determine and separate responsibilities among its proposed separate business units, it is suggested that competition within the telecommunications market will result merely in benefits to investors, rather than the end-users the separation is ultimately meant to benefit.
While the company awaits a decision from the government as to how it will divide the $1.35 billion in UFB contracts, it carved 4 percent from its operating expenses in the first quarter of the 2010 to 2011 financial year, maintaining flat earning levels. In an effort to further reduce costs, Telecom will switch to bi-annual reporting, rather than quarterly.