Chorus this week attributed declines in full-year revenue and earnings to regulatory intervention around wholesale broadband prices and said it is still unable to pay a dividend.
The New Zealand network operator on Monday reported revenues of NZ$1.01 billion (€577.3 million) for the 12 months to the end of June, down by 5% on the previous year. Despite its efforts to control costs, EBITDA slipped by 7% to NZ$602 million and net profit declined by 39% to NZ$91 million.
The numbers were "substantially impacted by the requirement to implement initial regulatory pricing decisions based on international benchmarking," the telco said, in a statement.
On 1 December last year new rules came into force that reduced the amount Chorus is able to charge for wholesale copper broadband – including unbundled copper local loop (UCLL) and unbundled bitstream access (UBA) – to NZ$34.44 per month from NZ$44.98.
Chorus has been lobbying hard for a price increase and in July New Zealand’s Commerce Commission published its latest draft decision on the subject, proposing a price of NZ$38.43 per month for the next five years.
That decision was a small victory for Chorus, but the operator still insists that the new draft pricing undervalues the real cost of network investment in New Zealand.
"The business initiatives we implemented in managing for cash have delivered results ahead of target for the year, going some way towards offsetting the very significant reduction in regulated pricing," said Chorus CEO Mark Ratcliffe.
"This, together with the slightly improved draft copper pricing, has helped the share price recover some value, although we remain unable to pay a dividend," he explained.
A year ago Chorus put dividend payments on hold due to the uncertain regulatory situation. On Monday it said it will update investors on its dividend policy once the Commerce Commission’s final pricing review has been completed, which is due to happen in December.
For the current financial year the operator expects capex to come in at NZ$580 million-NZ$630 million and adjusted EBITDA at NZ$546 million.
At mid-2015 the telco had 1.21 million broadband connections, up 4% over the last 12 months, including 88,000 fibre connections.
Its ultrafast broadband project is 54% complete, covering 368,000 premises with fibre. The rollout is complete in five towns with a further five to follow this year.
Chorus also said that the first phase of the government’s Rural Broadband Initiative (RBI) is close to being finished with new or upgraded broadband coverage extended to 93,000 rural lines, leaving 10,500 more to be covered in FY2016.
