Two Degrees cops bigger share of telco levy on rising market share

Monday 19th December 2016

Two Degrees Mobile must pay a bigger share of the annual levy that funds non-viable telecommunications services as the country's third-placed mobile operator continues to lift its market share.

The Auckland-based company will pay $3.6 million, or 7.3 percent of the Telecommunication Development Levy, for the 2015/16 year, up from $2.9 million, or 5.9 percent a year earlier. 2degrees was the biggest mover this year, easing the burden of the biggest three contributors: Spark New Zealand, Vodafone New Zealand and Chorus.

The levy was introduced in 2011 as part of the enabling legislation to carve Chorus out of Telecom, now known as Spark, and goes towards a contestable fund that helps pay for projects such as the rural broadband initiative and mobile black spot fund. It replaced Telecom's telecommunications service obligation, formerly known as the Kiwi Share, which was used to pay for telecommunications infrastructure where it isn’t immediately profitable to do so, such as in rural areas.

Toronto-listed 2degrees posted a 43 percent increase in annual revenue to $569 million in calendar 2015, generating earnings before interest, tax, depreciation and amortisation of $78.5 million. The mobile carrier's qualifying revenue used to determine its share of the levy rose 24 percent to $307.3 million.

Spark remains the biggest contributor, paying $18.9 million, or 38 percent, for the 2015/16 year, down from $19 million, or 38 percent, a year earlier. Vodafone's levy shrank to $13.1 million, or 26 percent, from $13.8 million, or 28 percent, while the contribution from Chorus was largely unchanged $11.1 million, or 22 percent.

The Commerce Commission, which sets the allocations, said the only adjustment to the final was increasing Trustpower's share because of more detailed information about its qualifying revenue, with the lines company to pay about $51,000, or 0.1 percent.

BusinessDesk.co.nz

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