Chorus blames drop in profits on regulator’s wholesale pricing decision

25 Aug 2015

New Zealand telecoms network operator Chorus has blamed regulatory pricing decisions for falling profits, as net income for its full year to 30 June 2015 fell to NZD91 million (USD60 million), down 39% from NZD148 million the year before. EBITDA dropped 7% to NZD602 million, while revenues stood at NZD1.01 billion, down 5% from NZD1.06 million in fiscal 2013/14. The wholesale operator is unhappy with the Commerce Commission’s move to reduce the prices Chorus can charge for leasing its infrastructure to retail service providers such as Spark and Vodafone.

A statement from the company said: ‘Chorus’ financial result for FY15 was impacted substantially by the requirement to implement initial regulatory pricing decisions based on international benchmarking … This regulatory pricing remains under review and the ongoing uncertainty has overshadowed positive increases in fixed line and broadband connections.’ The firm added: ‘Chorus continues to believe that the draft pricing significantly undervalues the true cost of network investment in New Zealand.’

Chorus said that the number of broadband subscribers on its networks rose 4% in the twelve months to end-June 2015 to 1.21 million, while the fixed line telephony user base increased marginally from 1.78 million to 1.79 million. Connections to its fibre networks more than doubled from 42,000 in mid-2014 to 88,000 a year later. Chorus says its deployments under the government-backed Ultra-Fast Broadband (UFB) scheme are now 44% complete.

New Zealand, Chorus (New Zealand)