No extra funding for Chorus in UFB deal with Crown Fibre
By Paul McBeth
March 11 (BusinessDesk) - Chorus won’t get any additional government funding from Crown Fibre Holdings as part of a deal
to help the telecommunications network operator manage cash flow and provide more certainty for the ultrafast broadband
roll-out.
The Wellington-based company has been given greater flexibility in building the network provided it meets the agreed
deadline to complete the national fibre network, and Crown Fibre Holdings will more closely align its existing funding
with completed work provided it meets certain conditions, Chorus said in a statement.
The deal will give Chorus more scope in deploying UFB to areas where it already has existing fibre to meet property user
targets by the end of next year, will let it make use of existing cabling to deliver UFB services to multi-dwelling
units, and charge property developers for the reticulation of lines in greenfield UFB areas.
“While Chorus is firmly focused on managing its costs, both parties have worked on the basis that we need to find
innovative ways to deliver better outcomes, and that would require a degree of give and take,” chief financial officer
Andrew Carroll said. “This flexibility will enable Chorus to better manage its cash flow through the peak of the balance
of the capital intensive period of the build, as well as addressing some of the $1 billion funding gap.”
Last month 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 Commerce Commission proposed cutting the network operator’s pricing on its copper line services, which
Chorus says has left a $1 billion hole in funding the roll out of the government-sponsored ultrafast broadband network.
Other changes to the agreement will see Chorus increase its non-standard installation fund by $8 million, while cutting
its annual fibre marketing spend in half to $2.5 million.
The new agreement with Crown Fibre Holdings takes effect from tomorrow.
Chorus shares rose 0.5 percent to $1.56 yesterday, and have gained 8.3 percent this year after being punished by
investors last year over the regulatory risk.
(BusinessDesk)