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Levy shows who is top in telco

Sarah Putt, Contributor. 12 December 2019, 8:04 pm

There are lots of polls that measure the success - or otherwise - of companies, but in New Zealand telecommunications, if you want to know who is head of the pack, you just have to check out the companies liable for the Telecommunications Development Levy (TDL).

To be eligible for the levy, a company must earn over $10 million a year in telecommuncations revenue. It is then ranked according to its percentage of industry qualified revenue - so basically the biggest companies pay the most. The TDL is capped at $50 million a year and is used for a variety of programmes, according to the Commerce Commission, which sets the levy each year.

"The Government uses the annual levy to pay for telecommunications infrastructure and services which are not commercially viable, including the relay service for the deaf and hearing-impaired, broadband for rural areas, and improvements to the 111 emergency service."

Today, the Commission released its final liability for the year of 1 July 2018 to 30 June 2019. As you might expect, the top three companies - Spark (34.85%), Vodafone (25.71%) and Chorus (21.81%) - pay the largest percentage of the TDL, with a combined liability of 82.35%. 2degrees at 8.68% follows a somewhat distant fourth, and Vocus is even further behind at 3.10%.

Meanwhile, the Commission comments that contributions from fibre service companies rolling out Ultra Fast Broadband in the areas that Chorus isn't - Enable, Northpower and Ultra Fast Fibre - have "increased significantly" in the past year. Which points to the strong demand for UFB. In addition, the Commission has "opened an investigation into whether MyRepublic failed to meet its obligation to provide audited financial information used to calculate the levy before the statutory deadline."

The chart below shows how the TDL is divided, along with the qualified revenue from each company.

Screen Shot 2019-12-12 at 7.55.56 PM.png

The Commission estimates the levy amounts to about 1% of telco services revenue. According to its statement today, there are changes afoot, with the TDL set to decrease to $10 million in 2020, and the levy expanded to include broadcasting services.

"Previously broadcasting services revenue was treated as non-telecommunications revenue meaning it was not in scope of the TDL," the Commission notes in its release today.

"The Telecommunications (New Regulatory Framework) Amendment Act 2018 altered the definition of 'telecommunication'. This means that some forms of broadcasting services revenue will now be treated as telecommunications revenue and will be relevant to determining whether a company meets the $10 million threshold."

A consultation document on these changes, with submissions closing in February, is available here



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