Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Chorus shares plunge on ComCom copper pricing decisions

Chorus shares plunge on ComCom copper pricing decisions

By Paul McBeth

Dec. 3 (BusinessDesk) - Telecommunications network operator Chorus saw its shares plunge 12 percent at the open of NZX trading following a Commerce Commission a draft decision that would steeply cut what it can charge for access to electronic switchgear used over its ageing copper lines network.

That was in spite of winning some pushback on pricing for the actual lines. The shares plunged 12 percent, or 40 cents, to $3, the lowest since June 21, after the competition regulator released a final determination on unbundled copper local loop (UCLL) and a draft regime for unbundled bitstream access (UBA) today, conceding ground on the regime for copper (UCLL) while signalling a sharp cut to UBA pricing.

The regulator set the new UCLL rates at a geographically averaged price of $23.52 per month per line from Dec. 1, 2014, a 3.9 percent reduction to the prices set in 2007. Urban UCLL prices have been set at $19.08 and rural at $35.20, effective immediately. UBA prices will be provisionally set at $32.45 per month, effective from Dec. 1, 2014, from the existing $44.98.

Telecommunications Commissioner Stephen Gale told a media briefing in Wellington the UBA decision was a draft ruling only, with limited international comparisons, and will go out for consultation with a final decision likely in June. If telecommunications companies are unhappy with the final benchmark, they can request the regulator use a cost-modelling approach to determine pricing instead, he said.

"This (UBA) price when finally decided in two years may have a significant impact on Chorus' revenue," Gale said.

Telecommunications Minister Amy Adams signalled immediate disquiet, saying the the government is reviewing the draft determination, which is "potentially significant for the industry and end users."

"New Zealand is one of the few countries in the world to have structurally separated its main telecommunications company, while at the same time rolling out a fibre network," Adams said. "This potentially highlights the need for a pricing methodology appropriate for the New Zealand context."

Chorus said it is reviewing the potential impact of the announcement and it has "very serious concerns about the effect of these decisions."

The network company said the draft UBA prices would lead to a "very material revenue reduction" and cause much cheaper copper services, which would "dramatically slow migration to UFB (ultrafast broadband) services."

Among concerns is the potential for much lower copper network pricing to deter investment and uptake of ultra-fast broadband, using the government-subsidised fibre network being laid throughout the country.

The UCLL service lets telecommunication companies use the copper network between an exchange and an end-user's premises to offer their own voice and broadband services. UBA gives access to Chorus's electronics, software and transport over the network, meaning telcos don't have to build their own.

Chorus was spun-out from Telecom as a separately-listed company last year to free up the telecommunications company from its regulatory burden and allow the network operator to successfully win a billion dollar subsidy to build a nationwide fibre network and rural broadband system.

Some 80 percent of the network company's revenue is still derived from the ageing copper network, and is subject to the Commerce Commission's pricing review.

Gale said he didn't expect the draft UBA regime to deter unbundling of exchanges and gives enough lead-in time for firms to recover their cost of investment.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Must Sell 20 Petrol Stations: Z Cleared To Buy Caltex Assets

Z Energy is allowed to buy the Caltex and Challenge! petrol station chains but must sell 19 of its retail sites and one truck-stop, the Commerce Commission has ruled in a split decision that acknowledges possible retail price coordination between fuel retailers occurs in some regions. More>>

ALSO:

Huntly: Genesis Extends Life Of Coal-Fuelled Power Station To 2022

Genesis Energy will keep its two coal and gas-fired units at Huntly Power Station operating until 2022, having previously said they'd be closed by 2018, after wringing a high price from other electricity generators who wanted to keep them as back-up. More>>

ALSO:

Dammed If You Do: Ruataniwha Irrigation Scheme Hits Farmer Uptake Targets

Enough Hawke's Bay farmers have signed up for water from the proposed Ruataniwha Water Storage Scheme for it to go ahead as long as a cornerstone institutional capital investor can be found to back it, its regional council promoter announced. More>>

ALSO:

Reserve Bank: OCR Stays At 2.25%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2.25 percent, in a decision traders had said could go either way, while predicting inflation will pick up as the slump in oil prices washes out of the data and capacity pressures start to build in the economy. More>>

ALSO:

Export Values Down: NZ Posts Biggest Annual Trade Deficit In 7 Years

New Zealand has recorded its biggest annual trade deficit since April 2009, reflecting weaker prices of agricultural commodities such as dairy products, beef and lamb, and increased imports of vehicles and machinery. More>>

ALSO:

Currency Events: NZ's New $5 Note Wins International Banknote Award

New Zealand’s new Brighter Money $5 note has been named Banknote of the Year in a prestigious international competition. The $5 note was awarded the IBNS Banknote of the Year title at the International Bank Note Society’s annual meeting. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news