Telecom ending donations to political parties

Telecom has announced it is ending all political donations, but said the move was not a response to government regulation of the company.

Telecom's 2006 annual report disclosed a $50,000 donation each to National and Labour and $10,000 each to ACT, the Greens, Progressive, United Future and the Maori Party.

The Government announced in May that it was "unbundling the local loop" - opening up the telecommunications network to other companies.

Telecom had traditionally made political donations as an expression of support for the political process, its chairman Wayne Boyd said today.

But he said after a review of its policy following the 2005 election, the company had decided to "end political donations altogether".

Shareholders regarded donations as a decision they should make themselves and a lot of New Zealand companies did not make significant political donations, he said.

"We are here to run a company, not to make political choices," he said.

Mr Boyd told reporters that the decision made at a board meeting yesterday was "absolutely not" a response to government regulation of Telecom.

Speaking earlier at Telecom's annual meeting in Wellingon, he had warned that government policy indecision could affect investment.

He told shareholders uncertainty over the future structure of Telecom was destabilising for Telecom, the industry it operated in and the capital market.

"We have highlighted in our submission to the select committee that policy indecision and any prolonging of the debate about models of separation will inevitably impact on Telecom's short-term, medium-term and long-term investment decisions.

"We cannot invest where we cannot see a return on that investment," Mr Boyd said.

"We are keen to work with the Government and other stakeholders to establish a sustainable environment that promotes competition and encourages investment."

Possible future models of separation of Telecom were being considered along with the Telecommunications Amendment Bill.

"We have proposed a form of operational separation which is based closely on that adopted by British Telecom in the UK.

"It goes further than the bill proposes, and establishes a totally stand-alone wholesale unit overseen by an independent group and performing against a set of legally binding undertakings which we want to negotiate with the Government," Mr Boyd said.

Telecom believed this was what customers and stakeholders wanted.

"We believe we are being responsible and forward thinking in proposing that model.

"We are not sitting on our hands waiting for the rules to be finalised. We are trying to show we are willing players in the new environment."

Telecom was doing this because investors needed certainty to invest.

"As for compensation - that comes down to a fair and workable price to be set for services such as unbundled local loops. And it also comes down to creating an environment in which we and others will want to invest and will see rewards for doing so."

- NZPA