Telecom takes valuations to task

By Chris Hutching

Friday 5th July 2002

Telecom has filed High Court proceedings against Christchurch City Council challenging the validity of utility valuations that have been used to levy rates on its assets.

If this action is successful, all utility rates previously levied may have to be refunded. It is estimated that tens of millions worth of rates may be at issue nationally. Telecom's argument focuses on two valuations carried out by the council's valuers within a three-month period in late 2001. The valuations differed by about 50%.

"We believe these were not valuations at all. For this situation to occur, something quite radical must have happened to the network. Alternatively, the prescribed method cannot possibly have been adopted and the valuations are invalid," Telco Asset Management's Mark Thomson said.

The problem revolves around the method of valuation laid down by the auditor general's rules and is called the optimised depreciated replacement cost method. It arises from litigation between Telecom and Auckland City Council.

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