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

 


Chorus gets access to early Crown Fibre funding for a price

Chorus gets access to early Crown Fibre funding for a price

By Paul McBeth

July 18 (BusinessDesk) - Chorus, the telecommunications network operator tasked with building the bulk of the nation's ultrafast broadband network, has cut a deal with Crown Fibre Holdings to bring forward funding of $178 million, though at a high interest rate and at the expense of dividends.

The Wellington-based company has a conditional agreement with Crown Fibre Holdings, the government entity funding the UFB build, which would grant Chorus a facility to bring forward funding budgeted to be spent in the 2018 and 2019 financial years of the fibre programme from October next year, the company said in a statement. The facility would have an effective finance rate of about 8.5 percent, meaning Chorus would receive between $141 million and $149 million if it fully drew on the advance.

The funding would also rely on there not being a material deterioration in Chorus's position, including the Commerce Commission's review of the company's regulated copper service prices not resulting in a lower price than the initial benchmark. Chorus also wouldn't be allowed to pay a dividend before drawing on the facility, and if it chose to use it, shareholders wouldn't receive a payment without Crown Fibre Holdings' approval before December 2019.

"This facility provides useful additional financial flexibility and liquidity if needed and does not have any ongoing financial cost unless drawn," chief financial officer Andrew Carroll said. "We have been discussing this initiative for some time and appreciate CFH's ongoing support as we work through the challenges presented by the Commerce Commission's initial pricing principle decision."

Earlier this year 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 commission proposed cutting the network operator’s pricing on its copper line services, which Chorus said left a $1 billion hole in the funding for the roll out of the government-sponsored UFB. In March, Crown Fibre Holdings gave Chorus greater flexibility in building the network provided it meets the agreed deadline, and has aligned funding with completed work.

Chorus is appealing a High Court ruling upholding the way the regulator set a theoretical price for services on the copper lines, and has also requested a more complete final pricing principle method is used to set the price. The regulator anticipates it will come up with a final price by April next year.

Today's conditional agreement is subject to Chorus's lending syndicate agreeing to certain matters, and the company said it's in talks with its banks on potential amendments to its existing facilities. The network operator would also have to meet its UFB build targets to access the funding.

The shares rose 0.6 percent to $1.68 yesterday, and have gained 17 percent this year, after being punished by investors last year over the regulatory risk.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Taxing Multinationals: EU Ruling Sours Apple

Shares of Apple slid, down 0.9 percent as of 3.08pm in New York, after the European Commission ruled that Ireland granted the company undue tax benefits of up to 13 billion euros (US$14.5 billion)—"illegal aid” under EU rules that the commission says Ireland now must recover from Apple. More>>

ALSO:

NZX Review: Best Practice Code Recommends Code Of Ethics

NZX, the sharemarket operator, is seeking feedback on proposed changes to its corporate governance best practice code including a published code of ethics, rules about share trading and continuous disclosure, and more transparency over board appointments and chief executive pay. More>>

ALSO:

Auditors:

Signs Of Life? SETI On Russian Space(?) Signal

A star system 94 light-years away is in the spotlight as a possible candidate for intelligent inhabitants, thanks to the discovery of a radio signal by a group of Russian astronomers... Could it be a transmission from a technically proficient society? At this point, we can only consider what is known so far. More>>

Post-Post: Brian Roche To Step Down As NZ Post CEO

Brian Roche will step down as chief executive of New Zealand Post in April 2017, having led the state-owned postal service's drive to adjust to shrinking mail volumes with a combination of cost cuts, asset sales, modernisation and expansion of new businesses. More>>

ALSO:

Company Results: Air NZ Rides The Tourism Boom With Record Full-Year Earnings

Air New Zealand has ridden the tourism boom and staved off increased competition to deliver the best full-year earnings in its 76-year history. More>>

ALSO:

New PGP: Sheep Milk Industry Gets $12.6M Crown Funding

The Sheep - Horizon Three programme aims to develop "a market driven, end-to-end value chain generating annual revenues of between $200 million and $700 million by 2030," according to a joint statement. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news