Telecom NZ embellished network costs: regulators

Dylan Bushell-Embling
03 May 2011

Telecom NZ has been accused of overvaluing its network assets by over NZ$1 billion ($807.4 million) in the accounts it prepares for regulators.

The incumbent operator may be forced to restate its FY10 submissions following an audit from the nation's Commerce Commission (ComCom).

Telecom NZ is required to publish financial and other statements about its network and wholesale and retail business activities to satisfy legislative requirements.

But ComCom today said the figures provided for FY10 were “unreliable” due to the overvaluing of its access network.

The overestimation has a flow-on effect throughout the regulatory financial statements, undermining the reliability of the information, telecom commissioner Ross Patterson said.

“As a consequence, a number of costs, including the cost of providing rural phone lines - for which Telecom has reported a loss - are likely to be substantially overstated,” he said.

ComCom is also considering making changes to Telecom's financial accounting requirements, the regulators revealed.

In its own statement, Telecom NZ attributed the disparity to the fact that amendments to the FY10 accounting requirements are open to interpretation.

“For certain key areas there are many possible valid interpretations that can be given. Different interpretation can produce quite different results,” the statement read.

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