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

 

Half Empty: Fonterra's 2017 Opening Forecast Below Expectations

Fonterra Cooperative Group raised its forecast farmgate milk payout for next season by less than expected as the world's largest dairy exporter predicts lower prices will crimp production and supply will pick up. The New Zealand dollar fell. More>>

ALSO:

Pest Control: Mouse Blitz Team Leaves For Antipodes

The Million Dollar Mouse project to rid Antipodes Island of mice is underway with the departure of a rodent eradication team to the remote nature reserve and World Heritage Area. More>>

Gongs Got: Canon Media Awards & NZ Radio Awards Happen

Radio NZ: RNZ website The Wireless, which is co-funded by NZ On Air, was named best website, while Toby Manhire and Toby Morris won the best opinion general writing section for their weekly column on rnz.co.nz and Tess McClure won the best junior feature writer section. More>>

ALSO:

Pre-Budget: Debt Focus Risks Losing Opportunity To Stoke Economy

The Treasury is likely to upgrade its forecasts for economic growth in Budget 2016 next week but Finance Minister Bill English has already signalled that more of his focus is on debt repayment than on fiscal stimulus or tax cuts... More>>

ALSO:

Fulton Hogan's Heroes: Managing Director Nick Miller Resigns

Fulton Hogan managing director Nick Miller will leave the privately owned construction company after seven years in charge. The Dunedin-based company has kicked off a search for a replacement, and Miller will stay on at the helm until March next year, or until a successor has been appointed and a transition period completed. More>>

ALSO:

Gordon Campbell: On Electricity, Executions, And Bob Dylan

The Electricity Authority has unveiled the final version of its pricing plan for electricity transmission. This will change the way transmission prices (which comprise about 10% of the average power bill) are computed, and will add hundreds of dollars a year to power bills for many ordinary consumers. More>>

ALSO:

Half Empty: Fonterra NZ, Australia Milk Collection Drops In Season

Fonterra Cooperative Group says milk collection is down in New Zealand and Australia, its two largest markets, in the first 11 months of the season during a period of weak dairy prices. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news