New Zealand's telecommunications regulator on Thursday rejected pressure from network operator Chorus Ltd to allow it to charge more for use of its broadband and copper line networks, which the company says it needs to make them viable. The Commerce Commission said Chorus would be able to charge a wholesale price of NZ$38.43 a month for a copper phone line and broadband connection, a few cents higher than that proposed last December but less than the company had sought for the government-backed ultrafast broadband network it is building. The draft decision, to be confirmed by the end of this year, will mean an increase of about NZ$4 a month in the interim price imposed by the regulator last December. Most submissions to the commission had called for lower charges. Chorus said the new price limits would hit earnings before interest, depreciation, amortisation and tax (EBITDA) by about NZ$80 million ($53.7 million) a year. The company posted EBITDA of NZ$649 million last year and has forecast between NZ$590 million and NZ$605 million for the current year. The regulator, however, said the higher price should not be backdated, and was also proposing Chorus should cut transaction charges by nearly a third, which would cost the company NZ$12 million a year in revenue. Chorus is building about 75 percent of the national ultrafast broadband network, which is going to cost around NZ$1.7 billion with the government contributing NZ$1.35 billion. "Chorus continues to believe that the draft pricing significantly undervalues the true cost of network investment in New Zealand," chief executive Mark Ratcliffe said in a statement. Chorus shares eased 0.7 percent to NZ$2.98 in early trading, compared with a 0.4 percent rise on the broader market. The company has suspended its dividends and revised capital spending to cover the earnings impact of the price controls, which it had feared might cost it as much as NZ$1 billion over six years. The company took the network operations of the former Telecom NZ Ltd, whose retail activities became Spark Ltd .
Source: http://www.reuters.com/article/2015/07/02/chorus-ltd-regulator-idUSL3N0ZH5HU20150702
