Other matters

Kiwi Share

The Kiwi Share was a special right convertible preference share held by the Crown prior to the Demerger, which acted as a constitutional mechanism to impose ownership restrictions on Telecom. Prior to 1 December 2011, as part of the Demerger, the Kiwi Share was converted into an ordinary share and the ownership restrictions embodied in the Kiwi Share ceased to exist.

Prior to 2001 the universal service obligations embodied in Telecom's constitution were known as the Kiwi Share Obligations. The Kiwi Share Obligations required Telecom to ensure the availability and affordability of basic telecommunications services for New Zealanders. In 2001 a Telecommunications Service Obligation (TSO) framework was put in place and aspects of the Kiwi Share Obligations were subsumed in a deed between Telecom and the Crown. The TSO is the regulatory mechanism by which universal service obligations for residential, local access and calling services are imposed and administered.

Under this obligation Telecom is required to:

• provide free local and emergency calling;
• limit local residential telephone service price increases to the rate of increase in the consumer price index; and
• ensure that line rentals for local residential telephone services in rural areas are not higher than the standard rental.

The Government is required, under the Telecommunications Amendment Act 2011, to commence a comprehensive review of the TSO at the start of 2013.

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