Chorus, TelstraClear cut deal over rural phone service levy

Monday 9th July 2012

The next round of American corporate earnings, kicked off by Alcoa on Monday, are expected to show the negative impact of Europe's continued struggle to get its sovereign debt crisis under control, as well as that of the slump in China's pace of expansion.

Analyst estimates compiled by Bloomberg forecast a 1.8 percent drop in profits for Standard & Poor's 500 companies in the April- Telecommunications companies Chorus and TelstraClear have cut a deal over the levies Telecom charged to run the nation's unprofitable rural phone services.

The settlement comes after TelstraClear sought partial repayments of the Telecommunications Service Obligation from 2003/04 to 2007/08 and a reduction in outstanding payments in 2008/09 and 2009/10 after the Supreme Court last year ruled the Commerce Commission erred in setting the levy.

The deal's terms and amount are confidential, and settles all issues arising from the Supreme Court decision, the companies said in a statement. The TSO levy, which has since been replaced by the Telecommunications Development Levy, was imposed when the government sold Telecom in 1990 and was known as the Kiwishare obligation.

Last year, Telecom settled a long-running battle with mobile rival Vodafone New Zealand just three months before the Supreme Court ruling. That judgment paved the way for other carriers, such as TelstraClear, to review their obligations to Telecom.

Chorus took on the TSO liabilities after it was carved out of Telecom as a standalone entity in November. Telstra, the Australian parent of TelstraClear, is in talks with Vodafone to sell its New Zealand unit to the British mobile phone company.

BusinessDesk.co.nz

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