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

 

Chorus shares fall as UFB costs grow, talks to Crown Fibre

Chorus shares fall as UFB costs grow, in talks with Crown Fibre Holdings

By Paul McBeth

Feb. 25 (BusinessDesk) - Shares in Chorus dropped 2 percent after the telecommunications network operator spun out of Telecom signalled the cost of building a nationwide ultrafast broadband network has increased by some $300 million.

The Wellington-based company expects the total UFB build to be between $1.7 billion and $1.9 billion, from a previous range of $1.4 billion and $1.6 billion. It flagged capital expenditure of $640 million to $690 million this financial year from previous guidance of $560 million to $610 million. The shares fell 6 cents to $2.98.

Chief executive Mark Ratcliffe told an investors' briefing the company is focused on bringing down the building costs, which have got away on the company in about 10 percent of the network's areas. Chorus has had early talks with Crown Fibre Holdings about pushing out some of its year three requirements into year four.

"It's clearly going to be expensive in year three to four if we have to meet those objectives," he said.

Ratcliffe said he was confident with the new UFB forecast, which is based on 18 months of actual building experience.

"We know what's going to be expensive if we build them in the same way next year," he said.

Chorus said the rate of its UFB rollout has been consistent with expectations, with building work completed for 88,590 premises as at Dec. 31, and it's on target to pass 149,00 premises by the end of June this year.

The network company is looking at alternative deployment methods to cut costs, and Ratcliffe told investors between 10 percent and 20 percent of the UFB build will be on overhead lines.

The company today reported earnings before interest, tax, depreciation and amortisation of $331 million in the six months ended Dec. 31 were in line with the $332.5 million forecast by Forsyth Barr analyst Jeremy Simpson. Net profit was $84 million, or 22 cents per share, on sales of $525 million, compared to Simpson's expectations of $80.8 million and $516 million respectively.

The results don't have an easily comparable period, as Chorus was still under the Telecom umbrella until November 2011.

The board declared an interim dividend of 10 cents per share payable on April 12.

Chorus has been caught in a regulatory wrangle in recent months after Telecommunications Commissioner Stephen Gale's draft decision to impose regulated price of unbundled bitstream access services of the ageing copper lines surprised the government and company alike.

The potential price cut has since been put on ice by Communications Minister Amy Adams, who has brought forward a review of the law governing the sector. The government has provided Chorus with a $929 million subsidy to build the fibre network, and there was an implicit expectation the regulator would go easy on the network operator on its regulated business.

Adams' decision gave Chorus enough certainty to shore up its dividend guidance, and it expected to pay 25.5 cents per share in 2014, provided all things remain the same. The board will deliver longer term guidance once the government's review has been completed.

Chorus increased its number of total fixed line connections to 1.79 million as at Dec. 31 from 1.78 million six months earlier. Baseband copper connections fell to 1.56 million from 1.59 million, while unbundled copper local loop connections rose to 109,000 from 97,000. Fibre connections rose to 15,000 from 10,000 and UBA advanced to 72,000 from 50,000.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Auckland Port To Recapture Gas: Union Calls On Ports To Stop Spewing Methyl Bromide

The Maritime Union of New Zealand welcomes the decision by Ports of Auckland to stop releasing methyl bromide emissions into the air. The move to fully recapture the toxic gas after fumigation sets a new benchmark for industry best practice. More>>

ALSO:

Retail: Banks Shoes Calls In Receiver

Banks Group, which runs 14 stores across the country under the brands including Banks Shoes and Shoe Connection, has been tipped into receivership at the request of director John Bank. More>>

ALSO:

NZ's Space Programme: Rocket Lab Makes It To Space (But Not Orbit)

Electron lifted-off at 16:20 NZST from Rocket Lab Launch Complex 1 on the Mahia Peninsula in New Zealand. It was the first orbital-class rocket launched from from a private launch site in the world. More>>

ALSO:

Earlier:

Budget: Irrigate (Good Times, Come On!)

Additional grant funding of $26.7 million over the next three years plus a capital boost of $63 million towards irrigation investments in Budget 2017 will deliver economic and environmental benefits through better use of water... More>>

ALSO:

Silver Fern Farms: Proposal To Close Fairton Sheepmeat Plant

Silver Fern Farms has advised its people of the proposal to permanently close the site, and has discussed potential transfer options to its other sites in the region as part of the consultation process...
More>>

ALSO: