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Govt could buy back Telecom shares

22 Feb 2011

According to a proposed change of the Telecommunications Amendment Bill, the government would be able to buy back shares of Telecom.

A new clause in the updated Supplementary Order Paper states, “The section authorises any acquisition by the Crown of Telecom’s shares or assets pursuant to its selection as a partner.”

In a blog post about the find, TUANZ chief Paul Brislen said, “It’s long been my view that a lot of the problems we’re working to solve with our telecommunications regime could be solved with one simple solution: buy back the network.

“They’ve avoided the N-word (nationalise) but still, that’s quite some statement. Nowhere else has the government hinted that this is at all possible.”

Last week both TUANZ and InternetNZ asked for an extension to Telco Bill submissions, so they could be looked at in greater depth.

“To find it in the SOP on page 74 reassures me that we did the right thing asking for an extension so we could look deeply within all this new legislation,” Brislen added.

Communications Minister Steven Joyce (pictured) told the Herald that any interest the government had in Chorus, was in fibre rather than the copper network.

"The definition of 'share' used in the SOP includes a range of forms of equity. So if the Crown were to invest in Chorus, it wouldn't necessarily be taking a direct shareholding. The equity stake could take another form that would not involve ownership of copper assets,” he said.

Brislen believes it’s the answer to our prayers: “It would be very clean, very easy to implement and would make a lot of sense if we bought the network assets and avoided the retail side of things.”

His post continued, “I think it could work like this: we buy the network infrastructure (call it Chorus 2, although The Post Office would probably be more appropriate) and build an SOE to run it as a commercial venture. We already have a company that could do this – Kordia (although it would have to get rid of Orcon). Kordia/Chorus 2 would be charged with network rollout and open access at a wholesale layer (I’d like layer one but I’m in the minority apparently) so that any telco or ISP or content provider could sell services to end customers (like you and me).

“There would be no squabbling over favouritism, the whole thing would be arm’s length from the retail world and the UFB money would be reinvested to extend the reach of the network assets.”

Read the full TUANZ blog here.