The sale of Jersey Telecom and most likely purchaser

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WRITTEN QUESTION TO THE MINISTER FOR TREASURY AND RESOURCES

BY DEPUTY G.P. SOUTHERN OF ST. HELIER

ANSWER TO BE TABLED ON TUESDAY 27th MARCH 2007

Question

1. W o uld theMinisteradvisememberswhether he initially considered that a global telecoms operator would be the best and most likely purchaserof JT, and, if so, doeshe remain of that view or hassome form of private equity nowbecome more likely, and if so, does this eliminate the possible benefit from economies of scale predicted and increasetherisksof major asset-strippingor job losses following privatisation?
2. D o es the Minister now accept that statements from the Jersey Competition Regulatory Authority'sown report to the EconomicDevelopment Minister, and reproduced on page 69ofS.R.5/2007 that both the Competition (Jersey)Law 2005 and the Telecommunications (Jersey) Law 2002 are "not optimal" do provide evidence that the powersof the JCRA do require review, contrary to his answers ofthe13th March 2007?
3. Is the Minister able toassuremembers that hewouldmake every effort, asMinister for Treasury and Resources, to ensure that the JerseyCompetitionRegulatoryAuthorityhas sufficient funds to enable it to enforce its decisions under the Competition (Jersey) Law 2005?

Answer

1. This question infers a simplistic view of the merits ofboth private equity andglobal telecoms operators as possiblepurchasersof Jersey Telecom. In practise it may not necessarilybe the case that a particular global telecoms operator will automatically have greater access to economies of scale than a particular private equity buyer,norisitnecessarilythecase that a particular private equity buyer will plan toown the companyfor a shorter period than a global operator.

Should the States decide to proceed with the sale of Jersey Telecom the eventual buyer will be selected on that buyer's specific merits and in particular the buyer's ability to meet each of the Minister's four sale principles -

( i) Sufficient arrangements are in place to protect the Island's consumers and ensure the maintenance

of the Island's essential telecommunications infrastructure.

( ii ) The best possible basis is provided for the long term growth and development of Jersey Telecom. ( ii i) T h e existing rights of Jersey Telecom's employees are adequately safeguarded.

( i v) The best price is obtained on behalf of the people of Jersey, consistent with the above three

principles, with the proceeds reinvested in the Strategic Reserve.

2. The JCRA'scomments referred to in the question are takenoutof context anddo not provideevidence that the JCRA'spowers require constant review. TheJCRAstatementwashighlighting that whereit is possible, effective competition is preferable or more optimal' than regulation. The JCRA's detailed views and commentson the interpretation ofevidence provided to the Economic Affairs Scrutiny Sub- Panel are publishedon the JCRA'swebsite.

The Minister is, however, of the view that the JCRA's powers should be kept under periodic review to ensure that it has, at all times, the necessary powers to carry out its functions.

States Members with any questions or concerns in relation to the JCRA's powers in respect of the regulation of telecommunications were invited to a presentation by the JCRA on Monday 26 March. Should Members have any further concerns or questions the Minister for Treasury and Resources invites Members to put these concerns either to himself or to the Minister for Economic Development so that they may be taken into consideration and addressed as appropriate.

3. The Minister forEconomicDevelopment is responsible for the provision of the JCRA's funding in relation to the Competition(Jersey) Law 2005. In the unlikely event that the JCRArequires additional funding to enforce telecommunications decisions made under the Competition Law the Minister for Treasury andResources will ensure that theAuthority receives the necessary funds.

The Minister highlights that the cost of regulation and enforcement of decisions made by the JCRA under the Telecommunications (Jersey) Law 2002 is funded through the licence fees of telecommunications operators. Such fees may be varied by the JCRA as required.