Copper Decision: Chorus Crying Wolf

5 NOVEMBER 2013

Copper Decision: Chorus Crying Wolf

Copper lines monopolist Chorus is crying wolf in its response to this morning’s pricing determination by independent regulator the Commerce Commission, the Coalition for Fair Internet Pricing said today.

“Chorus is a strongly profitable company that cannot possibly be at any risk as a result of this morning’s determination,” a spokesman for the coalition, Paul Brislen, also chief executive of the Telecommunications Users Association of New Zealand (TUANZ), said today.

“The impact on Chorus’s monopoly revenues from today’s decision is estimated to be around $104 million a year,” Mr Brislen said.

“This compares with its revenue of $1.06 billion last year, its $663 million EDITDA, the $681 million it spent on capex, its net profit after tax of $171 million, the $95 million it paid in dividends to its largely foreign shareholders and its $3.3 billion in total assets.

“What’s more, Chorus has known about the Commerce Commission pricing review since 2011 when it put in its pitch to build the new ultra-fast broadband (UFB) network.

“It has also had nearly a year to prepare for today’s announcement after last December’s draft determination.

“It is not credible for a company of this scale and profitability, which pays its chief executive $1.8 million a year to plan for the future, to say a well-signalled change in pricing would create the type of risks it has claimed in its extraordinary press statement this morning.

"The suggestion it could default on its debt as a result of not planning for a long-signalled regulatory change beggars belief coming from a chief executive earning $1.8 million a year.

“It almost appears to be a case of the company talking down its own share price, to put pressure on the government to intervene in the market and over-ride the independent Commerce Commission in order to boost its profits.

“Chorus is crying wolf, and the government should simply tell it to accept this morning’s decision, make whatever minor adjustments are needed to respond to it, and get on with meeting its contact it build UFB for the 30% of New Zealanders who are believed to want it by 2020, and the 75% of New Zealanders who will eventually have access to it.”

ENDS

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