Funding shortfall threatens Gigatown campaign

Last updated 05:00 12/12/2013

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Chorus could can its "Gigatown" competition under which it has been planning to offer gigabit broadband to one New Zealand city or town, as it seeks to clamp down on non-essential spending.

Chief executive Mark Ratcliffe said the competition had proved very popular and had created excitement about ultrafast broadband, "but everything has to be looked at as we are ‘managing for cash' ".

"We have got a massive funding shortfall and you have to look at absolutely everything. Nothing is sacred, though taking your flagship marketing campaign off air shortly after putting it on air would not be desirable at all.

"There can't be sacred cows, however much we might personally be attached to things."

Chorus chairman Sue Sheldon said this week that the company would probably "cut all discretionary activity", including growth-related capital investment, and re-price most of its commercial services.

Chorus' share price has plummeted since the Government admitted last month that it did not have the numbers in Parliament to override a Commerce Commission-ordered $10.54 cut in the price it will be allowed to charge for access to its copper network from next December.

Sheldon said Chorus's board believed a "full-price principle" review the company had demanded the commission undertake could see the price go back up to "around or even above current levels". But in the meantime it could not finalise its medium-term strategy and was assessing its "capital management options".

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- BusinessDay

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