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

 

R18: The Warehouse Group Praised For Removing Games

The decision by New Zealand’s largest retailer The Warehouse Group (TW Group), to withdraw stocks of the latest version of Grand Theft Auto V (GTA V) and other R18 games, has been praised by advocacy group Stop Demand Foundation. More>>

ALSO:

Air NZ Wine Awards: Victory For Villa Maria As Pinot Noir Thrills

It was a night to remember as Villa Maria Estate picked up one of the highest accolades of the evening, the O-I New Zealand Reserve Wine of the Show Trophy, at the 28th Air New Zealand Wine Awards. The Villa Maria Single Vineyard Southern Clays Marlborough ... More>>

ALSO:

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:

Get More From Scoop

 
 
Standards New Zealand

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