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

 


Chorus full-year profit drops 14% as sales, connections slip

Chorus full-year profit drops 14% as sales, fixed-line connections slip

By Jonathan Underhill

Aug. 25 (BusinessDesk) - Chorus, the telecommunications network operator facing regulated price cuts in December, posted a 14 percent drop in full-year profit that met market expectations on static sales and a marginal decline in fixed-line connections.

Profit was $148 million in the year ended June 30, from $171 million a year earlier, the Wellington-based company said in a statement. Sales rose to $1.058 billion from $1.057 billion. Profit of $148.8 million was expected, according to a Reuters survey.

The company has suspended dividend payments, renegotiated banking covenants and cut a deal with Crown Fibre Holdings to bring forward some funding of the ultrafast broadband network, which Chorus has a commitment to build even though price cuts set by the Commerce Commission will leave the company with what it says is a $1 billion funding gap for the project. Chorus is currently awaiting the outcome of a challenge to the new pricing it has made in the Court of Appeal.

“Chorus has delivered a solid financial performance during the year, but this success has been overshadowed by the need to reshape Chorus operationally and financially to address the challenges posed by the ongoing uncertainty with the regulatory framework and revised copper pricing,” said chief executive Mark Ratcliffe. "While good progress has been made, the funding gap remains very challenging and more will need to be done to return Chorus to stability.”

The company has forecast earnings before interest, tax, depreciation and amortisation of $590 million to $605 million, down from Ebitda of $649 million in 2014, which it attributed to the regulated price cuts and the company's UBA initiatives including the launch of its Boost products. Gross capex for 2015 is forecast at between $590 million and $605 million.

The full-year results show the decline in earnings included a 3.8 percent rise in operating expenses to $409 million, and a 12 percent increase in interest costs to $121 million. A breakdown of sales shows the changing profile of the company's services - sales of basic copper, its biggest business, fell 14 percent to $543 million while enhanced copper jumped 36 percent to $293 million. Revenue from fibre rose 25 percent to $75 million.

Labour made the biggest contribution to the gain in operating expenses, rising 18 percent to $79 million. Total capital spending fell to $679 million from $681 million, of which 83 percent related to fibre.

Total broadband connections rose by 51,000 to 1,163,000 in the latest year, as fibre broadband connections more than doubled to 42,000. Total lines remained "largely static," reducing by 3,000 during the period to 1,781,000, the company said.

The company said it is 31 percent through the rollout of UFB, putting the service within reach of 353,000 end users. The average cost per premises passed was $2,948, near the bottom end of guidance of between $2,900 and $3,200.

The share last traded at $1.73 and have shed 46 percent since they began trading in late 2011, after the company was carved out of what is now called Spark New Zealand.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Inequality: Top 10% Of Housholds Have Half Of Total Net Worth

The average New Zealand household was worth $289,000 in the year to June 2015, Statistics New Zealand said today. However wealth was not evenly distributed, with the top 10 percent accounting for around half of total wealth. In contrast, the bottom 40 percent held 3 percent of total wealth. More>>

ALSO:

What Winter? Temperature Records Set For June 20-22

The days around the winter soltice produced a number of notably warm tempertaures. More>>

Conservation Deal: New Kākāpō Recovery Partnership Welcomed

Conservation Minister Maggie Barry says the new kakapo recovery partnership between DOC and Meridian Energy is great news for efforts to save one of New Zealand’s most beloved birds. More>>

ALSO:

Tech Sector Report: Joyce Warns Asian Tech Investors View NZ As Hobbits And Food

Speaking in Wellington at the launch of a report showcasing the value of the technology sector to the New Zealand economy, Joyce said more had to be done to tell the country's technology stories overseas. More>>

ALSO:

Mediaglommeration: APN Gets OIO Approval For Demerger Plan

APN News & Media has received Overseas Investment Office approval for its plan to split out its NZME unit ahead of a potential merger with rival Fairfax Media's New Zealand operations. More>>

New Paper: Ninety-Day Trial Period Has No Impact On Firms' Hiring

The introduction of a 90-day trial period has had no impact on hiring by New Zealand companies although they are now in widespread use, according to researchers at Motu Economic and Public Policy Research. More>>

ALSO:

Corrections: Serco Exits Equity Stake, Remains As Operator

Serco has sold its equity stake in the company that holds the contract to design, build and run Wiri Prison in South Auckland but continues as sub-contractor to operate the facility. More>>

GDP: NZ Economy Grows Faster-Than-Forecast 0.7%

New Zealand's economy grew at a faster pace than expected in the first quarter of 2016 as construction expanded at the quickest rate in two years. The kiwi dollar jumped after the data was released. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news