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Telecom New Zealand

Bastian Lange is an urban and economic geographer and specialised within the creative industries, questions of governance and regional development. He spearheads the research and strategic consultancy office Multiplicities in Berlin

Michelle Ryan

on 17 October 2013

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Transcript of Telecom New Zealand

This story is just
New Zealand
in New Zealand?
Who gained with the privatisation of Telecom
What happened
Troughton Agenda
Sir Ronald Troter
Dr Peter Troughton
Hidden Agenda
the beginning
However, Telecom upset lots of powerful people and it became a political issue
6 Months after the sale they announced $ 332 million in profits
$ 4.25 billions
Telecom was sold
Thank You
Michelle Paula
The Telecom
Knowledge is Power
Mccabe (1994); Galt (2001)
Singleton (2005); Evans, Grimes, Wilkinson, & Teece(1996)
The History
The Telegraph
The Telegaph
The Telephone
Messry Driver and McLean established the
first telegraph line between
Port Chalmers and Dunedin.
Created the Telegraph Department
and the Electrical Telegraph Act in 1865
providing “a monopoly to construct,establish, maintain and regulate telegraphic communications”
First official phone call was made in NZ.
Mainly to increase the telegraph services.
What happens in the 80s?
Think Big
The government borrowed money from overseas, generating a large external deficit
They were commissed to explore ways of creating
the Post Office to be more profitable and efficient. They recommended the Post Office to be
disjointed into 3 State-Owned Enterprises (SOE): Postbank, NZ Post and Telecom.
Labour got into power. Because of the
constitutional and foreign exchange crisis,
New Zealand flew into a sequence of
economic reforms.
Roy Mason &
Michael Morris
Bell - Atlantic
Fay, Richwhite
Fletcher Challenge
According to Baier,
(Stiftung Ertomis&Anstiftiung)

The Privatization of
New Zealand
Minister of State Services
Stan Rodger appointed a
board to guide the transaction
Roy Masson was the chairman
Pat McInerney, former Post Office general director, was nominated as Telecom’s chief executive
Jack Woodward, professor of electrical engineering at Auckland University was part of the board
Telecom was valued at $NZ 2.3 billion
Masson supported the corporatism but did not endorse the full privatisation
His views clashed with Treasury and the government ministers who wanted prepare Telecom for a sell
He spent a long time trying to negotiate the value but he was unsuccessful to reorganise Telecom
He resigned in October 1987
Pat McInerney retired a month later.
He was chairman of Fletcher Challenge

Director of ANZ back and Air New Zealand

Chairman of the government SOE steering commitee

Member of the Business Roundtable
"The company that's gained the most out
of privatisation"
Fletcher Challenge had interests in Telecom, but he was persuaded to stay as chairmen
He resigned as soon as Fletcher decided they would make a bid
Brian Easton
He was working at a merchant bank where he specialised in the management and restructuring of high technology companies and prior ran the British Telecom's telephone operations

Holding a BSc in Electrical Engeneering and PHD in the field of microwave integrated circuit
Troter was replaced by Peter Troughton
Telecom services at that point was unsatisfactory
He upgraded the system
Subdivided the company into regional operations
Established tolls and international calls as a separate unit
Set up smaller companies within Telecom to deal with specific ventures like selling and in stalling telephones
"the most impressive telecommunications turnaround in history
Torn Bruns
People believed he was preparing Telecom for sale.
There was an election coming up and Labour kept saying they were not selling Telecom
Treasury, with the advice of the private sector including members of the Roundtable, was planning the sale.
Telecom went for sale on June 1990, however the Roundtable hired an economist as early as November 1987 to study telecommunication in NZ
In 1989, Treasury was talking to selected member of the Maori community to identify potential problems for the sale.
At the same time Allan Gibbs and David Richwhite has already gone overseas to find potential buyers.
Would create a competitive environment and deregulate the economy and the consumer would be better off
Would reduce the interest rates and the economy could move again
The government would save $NZ 230 millions each year, more than the amount they would received
Health and Education would get $NZ 300 million
It was expected to reduce the public debt to $NZ 14 billion, if sold all SOE
The government could pay down the public debt
Countries like England in 1984, Chile, Argentina, Mexico, Spain and South Korea made privatisation the global fashion

The IMF and the World Bank who favored countries who did privatise their public assets and by selling Telecom it would conform to the demands of creditors -

And NZ did not have a good image, as the country was in big debt because of the Think Big Strategy
The fate of public assets in NZ was determined by association of selected people from Treasury, the private sector and the SOE steering committee
For example:
Rob Cameron from Treasury became executive director at Fay, Richwhite.
Rodger Kerr, former Cameron's boss became executive director of the Business Roundtable
Pat Duignan left Treasury to work of Fay, Richwhite and then came back

Politics no longer regulates business,
business regulates politics
It was an orchestrated sale

The sixth biggest deal in the world

The public was against it but it did
not change the governments positions
It took 11 weeks to complete the sale

The government spent $ 41.3 million on the sale

And sold 100% of Telecom shares

The biggest deregulation ever done in the history
of telecommunication

Who where they?
American Companies
from Philadelphia and Chicago

Bell - Atlantic
In USA regulated by FCC
Federal Communication Commission
Making big Profit
The aim was to grow by selling
commercial data and voice systems
The adds on the White Pages for business increased 247%
Charge calls for toll free numbers
Misleading the customer with call system upgrades
Charge call for local business
The billing systems, pricing, misleading advertising and
anti competitive practices
No one to regulate them like the FCC in the USA
The Labour government made a new pledge for Telecom to regulate
Telcos in New Zealand
How Long? How much? What was the criterias?
Full transcript