Clarification Sought On Chorus Before Markets Open
COALITION FOR FAIR INTERNET PRICING
FRIDAY 11 OCTOBER 2013
Clarification Sought On Chorus Insolvency Risk Before Markets Open
The Coalition for Fair Internet Pricing is asking New Zealand Prime Minister John Key and Chorus Ltd to urgently clarify any insolvency risk the publicly listed company faces before the New Zealand Stock Exchange (NZX) and Australian Stock Exchange (ASX) open this morning.
Speaking from Brunei yesterday, Mr Key “absolutely” stood by his claim, first made on national television on Friday 13 September, that Chorus (CNU) could go broke if a Commerce Commission draft determination on the pricing of copper broadband and voice services is implemented.
This is despite Chorus having made no disclosure of an insolvency risk to either the NZX or the ASX and both exchanges indicating they are satisfied the copper network monopolist has complied with their disclosure rules.
The prime minister said yesterday his claims were based on advice from officials, were reasonably held and had not been made off the top of his head.
The Treasury has denied providing any advice to the government on Chorus’s financial viability.
Communications & IT Minister Amy Adams has said she is aware only of information on Chorus’s viability that is already in the public domain.
For his part, Mr Key told parliament on Tuesday 17 September that his concerns about Chorus’s solvency were “based on commercial-in-confidence discussions between Chorus and Ministry of Business, Innovation and Employment (MBIE) officials” and a private telephone conservation he had with the chair of Chorus, Sue Sheldon, in December 2012.
Mr Key also inaccurately told parliament that the “Commerce Commission ruling states there is a chance Chorus will go broke”.
A spokeswoman for the coalition, Sue Chetwin, also chief executive of Consumer NZ, said the situation “demands urgent clarification”.
“The prime minister appears to be claiming he is privy to private information that is unavailable to the market, to the general public or even to his own minister – and which Chorus will not confirm – that suggests an NZX15 company faces insolvency under the Commerce Commission draft determination,” she said.
“This is a serious matter and the prime minister should urgently issue that information publicly or at least explain why he believes it must be kept confidential from the market and the public.
“For its part, Chorus should issue a clarification to NZX and ASX before either opens this morning. The financial markets need to know whether or not Chorus is at risk of insolvency. Our view is that it is profitable under all pricing scenarios.”
Chorus has a market capitalisation of over NZ$1 billion, made a profit of NZ$171 million last year and paid NZ$95 million in dividends to its shareholders.
The Coalition for Fair Internet Pricing was founded by Consumer NZ, InternetNZ, and the Telecommunication Users Association of New Zealand (TUANZ) and is supported by CallPlus and Slingshot, the Federation of Maori Authorities, Greypower, Hautaki Trust, KiwiBlog, KLR Holdings, National Urban Maori Authorities, New Zealand Union of Students’ Associations, Orcon, Rural Women, Te Huarahi Tika Trust and the Unite Union.
A Covec study for the coalition, which has been peer reviewed by Network Strategies and found to be conservative, concluded that the government’s proposed copper tax would cost Kiwi households and businesses between $390 million and $449 million between 1 January 2015 and 31 December 2019 over the price for copper broadband and voice services that Commerce Commission work indicates is fair. The latest demands by Chorus would take this cost to Kiwi households and businesses to $979 million.