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

 

UPDATE Chorus shares slip after ‘pragmatic’ deal with CFH

UPDATE Chorus shares slip after ‘pragmatic’ deal with Crown Fibre Holdings

(Adds investor comment, minister comment, share price throughout)

By Paul McBeth

March 11 (BusinessDesk) - Shares in Chorus slipped after the telecommunications network operator said it reached an initial deal with Crown Fibre Holdings to manage cash flow and provide more certainty for the ultrafast broadband roll-out.

The telecommunications infrastructure company has been given greater flexibility in building the network, provided it meets agreed deadlines to complete the national fibre roll-out, and Crown Fibre Holdings will more closely align its existing funding with completed work as long as certain conditions are met, Chorus said in a statement.

“Sensible and pragmatic is probably the best way to sum it up,” said Matt Goodson, managing director at Salt Funds Management. “It introduces some important flexibility for Chorus in terms of where it rolls out fibre and when.”

The shares declined 0.6 percent to $1.55 and have gained 8.3 percent this year after being punished by investors last year over the regulatory risk.

Salt Funds’ Goodson said investors still have some questions about the detail of the new arrangements, but that if Chorus can get through the next two years building the network, things will get easier.

The deal will give Chorus more scope in deploying UFB to areas where it already has existing fibre to meet property user targets by the end of next year, will let it make use of existing cabling to deliver UFB services to multi-dwelling units, and charge property developers up to $900 for the reticulation of lines in greenfield UFB areas.

Chorus chief financial officer Andrew Carroll said it was too early to put a dollar value on the agreed changes, but that this initial set of initiatives will help the company deliver UFB faster, smoother and cheaper.

“This flexibility will enable Chorus to better manage its cash flow through the peak of the balance of the capital intensive period of the build, as well as addressing some of the $1 billion funding gap” created by last year’s Commerce Commission decisions that slashed the price of unbundled bit access, an element of the current copper wire network, further than Chorus had expected.

Communications Minister Amy Adams welcomed the first tranche of agreements, saying the changes are within the government’s $1.35 billion fiscal envelope to support the fibre network.

“The overall timeframe for the roll out, the start and completion dates for each candidate area, the coverage area, and the completion date for priority users are all unchanged,” she said in a statement. “I am advised that talks between Crown Fibre Holdings and Chorus are on-going in respect to possible further adjustments to the companies’ contract.”

Last month Chorus announced plans to scale back re-investment in its ageing copper network, which faces regulated price cuts, while introducing new unregulated revenue streams and cutting costs, including probable job cuts. It also suspended payment of an interim dividend.

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 funding the roll out of the government-sponsored ultrafast broadband network.

Other changes to the agreement will see Chorus increase its non-standard installation fund by $8 million, while cutting its annual fibre marketing spend in half to $2.5 million.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

South Island Flooding: Focus Moves To Recovery

As water recedes throughout flood-impacted areas of the South Island, Minister of Civil Defence Nathan Guy has praised the efforts of those who were involved in the response to the flooding... More>>

ALSO:

Superu Report: Land Regulation Drives Auckland House Prices

Land use regulation is responsible for up to 56 per cent of the cost of an average house in Auckland according to a new research report quantifying the impact of land use regulations, Finance Minister Steven Joyce says. More>>

ALSO:

Fund For PPP Plans: Govt Embraces Targeted Rates To Spur Urban Infrastructure

The government's latest response to the Auckland housing shortage will see central government and private sector firms invest in 'special purpose vehicles' to fund essential roading, water and drains that Auckland Council can't fund without threatening its credit rating. More>>

ALSO:

Fletcher Whittled: Fletcher Dumps Adamson In Face Of Dissatisfaction

Fletcher Building has taken the unusual step of dumping its chief executive, Mark Adamson, as the company slashed its full-year earnings guidance and flagged an impairment against Australian assets. More>>

ALSO: