Minister rejects Telecom plan

Telecom has been told to rethink its plan for operational separation after Communications Minister David Cunliffe yesterday rejected the amended plan filed by New Zealand's largest listed company.

Telecom has until March 25 to revise its separation plan.

ABN Amro Craigs broker Peter McIntyre summed up the feelings shown on the market after the announcement when he said Telecom had to constantly look backwards to see if every decision it made met the approval of the Government.

‘‘We now have New Zealand's first publicly listed SOE with the directors and chairs Helen Clark and Michael Cullen and chief financial officer David Cunliffe.

‘‘We have two large telecommunications companies in this region - Telstra and Telecom. Telstra is far less affected by Australian Government influence. In New Zealand, the Government is always stating what it wants. It's a pity for the stock,'' Mr McIntyre said in an interview.

Telecom's share price has suffered in recent times and yesterday fell further to a 15-year low.

Mr Cunliffe issued Telecom with a notice requiring further changes to be made to finalise the operational separation process.

The feedback from those making submissions to the amended plan identified a need for greater clarity to ensure the operational separation would be effective and enduring.

‘‘In general terms, Telecom's revised undertakings come close to meeting my amending determination. However, there are a few areas where clarifi cation of the undertakings is still required,'' Mr Cunliffe said

The minister had asked Telecom to provide a clear upper limit on group-based incentives to ensure wholesale manage ment was ‘‘encouraged'' by those incentives to treat all its customers, including retail, equally he said.

Other key changes requested included greater clarity around IP interconnection, as well as a range of other technical matters.

Telecommunications Users Association chief executive Ernie Newman said from London that Mr Cunliffe had done the right thing in sending the proposals back for a re write.

‘‘The changes requested are not huge in scope but they are critically important.''

Other phone companies needed to know with certainty that the confidential information they supplied was properly protected, key Telecom managers' incentives were appropriate to their roles and the legal framework was as robust as it could be.

Separation day on March 31 would be a watershed for New Zealand businesses and citizens, with more choice and better value in the market, Mr Newman said

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