Get in early or pay dearly for ultrafast

TOM PULLAR-STRECKER
Last updated 05:00 26/08/2014

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Homeowners with poor access to their properties are in the dark about how quickly a $28 million fund to connect their homes with ultrafast broadband is being used up.

Those that don't get ultrafast broadband (UFB) early may have to pay hundreds or even thousands of dollars to connect to the network.

NZX-listed Chorus, which yesterday reported a 13 per cent drop in its annual net profit, is building 69 per cent of the UFB network.

It originally agreed only to connect homes free-of-charge if they could be connected to the street network with 15 metres of trenching or a 30m overhead cable.

It later set aside $20m to pay for harder, "non-standard" connections and upped that fund to $28m as a result of negotiations with Crown-owned company Crown Fibre Holdings (CFH) in March.

However, it has acknowledged the fund is likely to run out before all homes with poor access are connected to UFB.

Chorus had spent only $100,000 from the fund in March 2013 when work on the UFB network had just started. But it failed to update analysts on the new total when it released its annual results, indicating it had yet to reach agreement with CFH on what spending last year had qualified towards its $28m commitment.

Spokesman Ian Bonnar said it was continuing to engage with CFH on what was spent last year, but indicated there was no dispute as such. "There's no issue - just one of taking them through the detail and we've only just finalised our end of year accounts.

Bonnar said Chorus would be happy to consider being involved if the Government chose to extend the roll-out of UFB to more towns, as has been speculated this week.

Chorus reported an annual operating profit of $649 million for the year to June 30. The operating profit was down 2 per cent on last year but a few million dollars higher than some analysts' expectations.

Net profit was down 13 per cent at $148m and revenues were up just $1m, essentially flat at $1.06b. Chief executive Mark Ratcliffe described it as a solid result, but one overshadowed by regulatory uncertainty.

He said Chorus would spend between $590m and $640m on capex this year as it continued to roll out its 69 per cent share of the ultrafast broadband network.

Analysts, including J P Morgan and Forsyth Barr, say investors in the company are basically gambling on the outcome of a regulatory review of the prices Chorus will be allowed to charge for its copper network.

The Commerce Commission is due to publish the draft results of a regulatory review in December.

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