Chorus UFB commitments in doubt

Last updated 17:38 14/12/2013

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A report confirms that Chorus would not be able to fulfill its ultrafast broadband commitments if it must cut its prices for copper broadband.

A Commerce Commission ruling last month that Chorus must cut its copper prices by $10 led to the company saying it would not be able to deliver on its contract to connect most of New Zealand to the planned ultrafast broadband network due to the financial impact.

A report from Ernst & Young Australia received by the Government today shows the company would have a $250 million funding gap at the Commerce Commission price,even if it adopted extensive streamlining measures, telecommunications minister Amy Adams said.

If it did not streamline, the gap would be in the order of $1 billion.

“The report confirms the initial figures released by Chorus about the impact of copper price changes on its financial position, and lays to rest claims by some that the figures were overstated," Adams said.

Chorus will negotiate with Crown Fibre Holdings, the Government company overseeing the UFB network, on contract changes to try to close the gap, she said.

Leader of the Opposition David Cunliffe said the release of the report was cynical.

"The Government drops it on a Saturday afternoon to divert attention from the fact it is copping fall-out from the asset sales referendum," he said.

"From first reading it appears Kiwis could again be being softened up for another corporate welfare pay-out, with suggestions the taxpayer could be left to pick up a $200m-$250m shortfall."

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- Fairfax Media

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