Chorus warns of ongoing uncertainty
Chorus chairwoman Sue Sheldon has warned investors at its annual meeting in Wellington that uncertainty over its future profits could linger for a further six months until May while the Commerce Commission reviews the price it can charge for its copper-based services.
Sheldon said the company spent $274 million last year - more than 80 per cent of its total capital expenditure - rolling out fibre-optic cable under the Government's ultrafast broadband (UFB) scheme and said that would increase to $450-$480m this year.
But she said the majority of Chorus' revenues would continue to come from regulated copper-based services for at least the next eight years.
"The simple fact is that these revenues provide the wherewithal for our investment in fibre," she said. "There is nowhere for a revenue shortfall to be absorbed, if the Commerce Commission price reviews mean that Chorus does not recover its costs.
"A reduction in copper pricing must also slow migration to our new fibre network, undermining New Zealand's evolution to a more productive technology and also damaging our long term viability."
Sheldon said there appeared to be a "disconnect" between government policy to encourage ultrafast broadband and the regulatory environment.
Chief executive Mark Ratcliffe said Chorus was now moving from the start-up phase of the UFB rollout to a phase where the emphasis was on delivering a faster and more efficient deployment.
"This is critical given our 'year one' deployment costs and our target of reducing costs per premises passed to between $2500 and $2700 for this financial year. By the end of the deployment programme our aim is to have that cost even closer to the $1118 that the Crown is financing for each premise passed."
Ratcliffe said Chorus hoped to provide more certainty to retail providers over the cost of connecting "non-standard" premises with difficult access to the UFB network "in the very near future".
The proportion of Chorus shares owned by New Zealanders had grown to 45 per cent, Sheldon said. Chorus shares are currently trading unchanged at $3.36.
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