3. Process and terms of renewal

Issue 3.1

Do you have any comments on the proposed timing of the renewal offers?

76. We note that the Ministry intends to make offers before 28 November 2006. Telecom would welcome offers being made before that date, as it would provide us with the certainty we require to make key investment decisions.
77. If the spectrum were to be auctioned, that auction should be held as soon as possible to provide certainty and enable planned upgrades.

What would be a reasonable period for the incumbent rightholders to consider whether to accept or reject the renewal offers? Why?

78. We consider that six months would be more than sufficient for incumbents to accept or reject the renewal offers. We would hope to be able to accept or reject any offer before the expiry of six months, to ensure speedy resolution of this process.
     

Issue 3.2

Do you have any comments on the terms of offer?

79. The discussion paper simply notes that a binding offer containing terms will be provided to management rightholders in due course. Given there is no detail of the actual terms of the offer we cannot comment at this stage.
     

Issue 3.3

Do you have any comments on the terms of settlement? Would you prefer an early one-off payment or annualised payments? Why?

80. We would prefer an early one-off payment because that entails economic benefits for us. It guarantees certainty of cost and makes explicit the tradeoffs and costs Telecom faces over the 20 year management right tenure.

What should be the latest date for settlement? Why? What should be the penalty for failure to settle on time? Why?

81. Telecom understands the Ministry to be proposing that the latest date for settlement will be six months prior to the expiry of the management rights, to enable the Ministry to auction the management rights should the purchaser fail to settle. We understand this to be the process confirmed by Cabinet Minute 04(41/24) and we agree with this process.
82. Telecom does not consider it necessary to impose penalties for failure to settle on time. 
     

Issue 3.4

Do you have any comments on allowing purchasers to assign and transfer contractual rights and obligations prior to settlement?

83. Telecom notes that this has previously been the Ministry’s practice, and we would support the practice continuing.
     

Issue 3.5

Do you have any other comments on the process and terms of renewal?

84. Telecom would recommend that a workshop be held to agree a ‘generic model’, the associated input values and how they are to be applied. After a workshop, we would be grateful if we could have the opportunity to review the methodologies in total, before the Ministry determines the prices upon which it will base its offers to incumbents.