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

 


Chorus 1H profit falls 7.1%, won’t pay dividend

Chorus 1H profit falls 7.1%, won’t pay dividend as auditor notes regulatory risks

By Paul McBeth

Feb. 24 (BusinessDesk) - Chorus, the telecommunications network operator, reported a 7.1 percent decline in first-half profit and won’t pay an interim dividend in response to regulated price cuts that its auditor flags as “a significant uncertainty.”

Net profit fell to $78 million, or 17 cents per share, in the six months ended Dec. 31, from $84 million, or 21 cents, a year earlier, the Wellington-based company said in a statement. First NZ Capital was predicting a profit of $80.5 million. Earnings before interest, tax, depreciation and amortisation sipped 0.6 percent to $329 million on a 1.9 percent increase in revenue to $535 million.

The company dropped its interim dividend and plans to cut costs in operations and capital projects from July in preparation for Commerce Commission-enforced price cuts from December this year.

Auditor KPMG tagged Chorus’s accounts without qualifying its opinion, saying “significant uncertainties exist in relation to future regulatory, legal and political outcomes that may impact on the assessment of the carrying value of Chorus’ assets.”

“We are getting on with managing our costs and revenues without reliance on any regulatory outcomes,” chief executive Mark Ratcliffe said. “The reality of our situation is that like all of the telecommunications industry we are adapting our business to significantly lower revenues.”

Last year the Commerce Commission proposed cutting the network operator’s pricing on its copper line services, which Chorus says has left a $1 billion hole in the funding to finance roll out of the government-sponsored ultrafast broadband network.

Chorus is in negotiations with Crown Fibre Holdings over building the network, but Communications Minister Amy Adams has indicated the government expects the company to fill most of the $1 billion funding hole it says has opened because of the impact of price cuts on its cash flow.

Ratcliffe said the company has discussed a number of potential initiatives with Crown Fibre Holdings, and hopes to announce the end to the first tranche of measures shortly.

Chorus’s annual earnings will likely be at the top of its previous guidance range of flat to a low single digit decline in EBITDA, the company said.

Operational cash flow jumped 85 percent to $340 million, lagging the $355 million net cash spend on investing activities. Net debt was $1.84 billion, 2.8 times EBITDA and within Chorus’s financial covenant of 3.75 times.

The company kept its capital spending guidance of between $660 million and $690 million this year, though increased forecast capex on fibre by $20 million to between $550 million and $570 million due to higher than budgeted demand and an increase in fully-funded school connection work.

The company passed 46,000 premises in its UFB build in the six-month period and is targeting a cost of $3,100 per premise for the 2014 financial year before any ‘pain’ or ‘gain’ share with service companies.

Chorus had total fixed line connections of 1.78 million as at Dec. 31 from 1.79 million a year earlier. Connections on baseband copper fell to 1.5 million from 1.56 million a year earlier, while unbundled copper local loop rose to 125,000 from 109,000 and naked basic/enhanced unbundled bitstream access (UBA)/naked Very-high-bit-rate digital subscriber line (VDSL) rose to 103,000 from 72,000. Fibre connections climbed to 27,000 from 15,000 a year earlier.

Total broadband connections rose to 1.13 million as at Dec. 31 from 1.08 million a year earlier. Basic UBA connections fell to 246,000 from 474,000, with enhanced UBA gained to 747,000 from 530,000, and naked enhanced UBA up to 87,000 from 60,500. VDSL connections were 20,000 and fibre connections were 16,000 from negligible numbers a year earlier.

The shares rose 1.1 percent to $1.435 on Friday, and have more than halved since the Commerce Commission first flagged steep price cuts were likely in December 2012.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Future Brighter Money: RBNZ Releases New Bank Note Designs

New Zealand’s banknotes are getting brighter and better, with the Reserve Bank today unveiling more vibrant and secure banknote designs which will progressively enter circulation later next year. More>>

ALSO:

Commerce: Supermarket Inquiry Finds No Breaches By Countdown

The Commerce Commission inquiry into anti-competitive behaviour by Countdown supermarkets, alleged by former Labour Party MP Shane Jones, has found nothing to warrant prosecution, although it warns supermarkets to take care in the way they communicate... More>>

ALSO:

Crown Accounts: English Flags ‘Challenge’ To Budget Surplus

Finance Minister Bill English is warning next month’s half yearly fiscal and economic update from the Treasury may not forecast a budget surplus, saying that returning the government’s accounts to surplus in 2015 will be “a challenge”, given the decline in commodity prices and weak global inflation. More>>

ALSO:

March 2015: Netflix To Launch In Australia And New Zealand

World’s Leading Internet Television Network to Offer Original Series, Movies, Documentaries, Stand-Up Comedy Specials and TV Shows for Low Monthly Price More>>

ALSO:

Price Of Cheese (Is Up): Dairy Product Prices Fall To Five-Year Low

Dairy product prices fell in the latest GlobalDairyTrade auction to the lowest level in more than five years, led by declines in rennet casein and skim milk powder. More>>

ALSO:

Gordon Campbell: On The Australians Scoring Trade Points Against Us With The Chinese

It hasn’t been a great year for Trade Minister Tim Groser... To top it off, Australia has just signed a FTA with China that has far better provisions on dairy exports than what New Zealand currently enjoys in our own FTA with China. More>>

ALSO:

Iwi & Local Consultation: Oil And Gas Block Offer 2015 Begins

Energy and Resources Minister Simon Bridges today announced the start of the Block Offer 2015 process for awarding oil and gas exploration permits. More>>

Industrial Action: Stats NZ Throwing Public Money Away Duplicating Data

The Public Service Association (PSA) says Statistics NZ are throwing money away by collecting the same data twice for official statistics such as the Consumer Price Index... As part of the ongoing industrial action, field interviewers who are PSA members are continuing to collect data, but are not sending it through to Statistics NZ. More>>

ALSO:

Other Stats:

Space: Rosetta's 'Philae' Makes Historic First Landing On A Comet

After more than a decade traveling through space, a robotic lander built by the European Space Agency has made the first-ever soft landing of a spacecraft on a comet. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news