SCRUTINY

 

PRESS RELEASE

 

IMMEDIATE

 

Sent 11th January 2008

 

Telecoms Privatisation Scrutiny Sub-Panel - Comments on P.153/2007 JT Group Limited (“Jersey Telecom”): Proposed Sale.

 

 

The Telecoms Privatisation Scrutiny Sub-Panel under the Chairmanship of Deputy Geoff Southern has recently held Public Hearings on the proposed sale of Jersey Telecoms, in addition to seeking legal and technical advice on the feasibility of the assurances given by the Minister for Treasury and Resources in the sale proposition.

 

Following evaluation of the information received to date on the subject, the Sub-Panel does not believe that it is in the Islands best interest to sell Jersey Telecom at this time. It remains concerned that the assurances given by the Minister for Treasury and Resources (within tables one and two on pages 46 and 47 of P.153/2007) may not be achievable. Additionally, the proposition does not address the fundamental issue of fair and equal access to the telecommunications infrastructure, which is currently owned and operated by JT.

 

Although the Sub-Panel still have many concerns regarding the validity of the assurances given by the Minister, it draws attention to the following three fundamental flaws in the Minister’s plans that must be addressed prior to any consideration to sell JT.

 

1.      The telecommunications regulatory framework lacks fundamental powers and resources to ensure a level playing field in the telecommunications sector; although a review into the powers and resources of the JCRA is planned, it will take time for the required legislative amendments to be implemented. The Sub-Panel strongly recommends that a debate on the principle of selling JT should not even be considered until the revised regulatory framework is in place and is seen to be effective in providing a competitive market place.

 

  1. EU telecom regulators are moving to mandatory structural separation. The JCRA and the Minister for Economic Development agree that structural separation is required to remove the incentive for the incumbent operator to discriminate against competitors. It would appear from evidence received by the Sub-Panel that the Minister for Treasury and Resources has not given full consideration to the case for structural separation as presented by the JCRA.

The issue of functional or structural separation of JT needs to be addressed and if appropriate, implemented before of any decision to privatise.

 

  1. The Minister for Treasury and resources has admitted that he is unsure how to protect the Islands Telecommunications services from the risks associated with high levels of gearing (debt to equity ratio) incurred by any future owner of JT; “As I say, at the moment I am not convinced that I have the right solution or that there is even a right solution for this one.  It is simply an issue which is flagged up for which we do need to find a solution before the time comes.” [1]

 

The Sub-Panel is also concerned that this period of uncertainty may be damaging to JT as a business and unsettling for JT’s staff. In the light of recent evidence received, the Sub-Panel has serious concerns that a full sale of JT, in line with Proposition P.153/2007 JT Group Limited (“Jersey Telecom”):Proposed Sale, could potentially result in a less competitive market, higher costs of regulation, increased costs to customers and greater risks to the future provision of telecoms services in Jersey.

 

The Sub-Panel are expecting to receive submissions from Jersey Telecom and union representatives. Following the consideration of these submissions, the Sub-Panel will issue a supplementary report to the initial Scrutiny Report; S.R.5/2007 - Jersey Telecom – Privatisation by Thursday 31st January 2008.

 

Ends

 

IMMEDIATE

 

For further information, please contact:

Liz Kingston-Walsh

Scrutiny Officer

441030

 

 

Media Interviews

Deputy Southern can be contacted on 728231 or 07797 813606. He will be happy to give interviews on the subject.

 

 

Notes to editors:

 

The members of the Telecoms Privatisation Scrutiny Sub-Panel are–

 

Deputy Geoff Southern (Chairman)

Deputy James Reed

Deputy Gerard Baudains

Deputy Judy Martin


[1] Page 2, Public Hearing Transcript 18th December 2007 (Minister for Treasury & Resources)