Telecom assets overvalued

Telecom has overstated its network asset value for the second year running, according to the Commerce Commission.

The Herald reports that the value of key assets has been overstated by as much as $1.3 billion for the year ended June 30, 2010, up on the $711 overstatement of last year.

The difference in valuation between the Commerce Commission and Telecom comes down to accounting methods, with the former using historical cost account (HCA) while the latter uses current cost account (CCA) to determine value.

The biggest difference was in the passive copper and fibre network’s value, with Telecom’s CCA valuation coming at $4.6 billion to the Commission’s $1.4 billion HCA valuation.

Read more at nzherald.co.nz.

The Commerce Commission’s May 03, 2011 report can be found here.