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

 

Cosmetics & Pollution: Proposal To Ban Microbeads

Cosmetic products containing microbeads will be banned under a proposal announced by the Minister for the Environment today. Marine scientists have been advocating for a ban on the microplastics, which have been found to quickly enter waterways and harm marine life. More>>

ALSO:

NIWA: 2016 New Zealand’s Warmest Year On Record

Annual temperatures were above average (0.51°C to 1.20°C above the annual average) throughout the country, with very few locations observing near average temperatures (within 0.5°C of the annual average) or lower. The year 2016 was the warmest on record for New Zealand, based on NIWA’s seven-station series which begins in 1909. More>>

ALSO:

Farewell 2016: NZ Economy Flies Through 2016's Political Curveballs

Dec. 23 (BusinessDesk) - New Zealand's economy batted away some curly political curveballs of 2016 to end the year on a high note, with its twin planks of a booming construction sector and rampant tourism soon to be joined by a resurgent dairy industry. More>>

ALSO:


NZ Economy: More Growth Than Expected In 3rd Qtr

Dec. 22 (BusinessDesk) - New Zealand's economy grew at a faster pace than expected in the September quarter as a booming construction sector continued to underpin activity, spilling over into related building services, and was bolstered by tourism and transport ... More>>

  • NZ Govt - Solid growth for NZ despite fragile world economy
  • NZ Council of Trade Unions - Government needs to ensure economy raises living standards
  • KiwiRail Goes Deisel: Cans electric trains on partially electrified North Island trunkline

    Dec. 21 (BusinessDesk) – KiwiRail, the state-owned rail and freight operator, said a small fleet of electric trains on New Zealand’s North Island would be phased out over the next two years and replaced with diesel locomotives. More>>

  • KiwiRail - KiwiRail announces fleet decision on North Island line
  • Greens - Ditching electric trains massive step backwards
  • Labour - Bill English turns ‘Think Big’ into ‘Think Backwards’
  • First Union - Train drivers condemn KiwiRail’s return to “dirty diesel”
  • NZ First - KiwiRail Going Backwards for Xmas
  • NIWA: The Year's Top Science Findings

    Since 1972 NIWA has operated a Clean Air Monitoring Station at Baring Head, near Wellington... In June, Baring Head’s carbon dioxide readings officially passed 400 parts per million (ppm), a level last reached more than three million years ago. More>>

    ALSO:

    Get More From Scoop

     
     
     
     
     
     
     
     
    Business
    Search Scoop  
     
     
    Powered by Vodafone
    NZ independent news