Final Pricing Principle (FPP) announcement
The enclosed stock market announcement was released by Chorus this morning
in relation to the draft Final Pricing Principle (FPP) announcement from the Commerce Commission.
What's happening?
The Commerce Commission has this morning released its draft FPP determination which proposes an aggregate for UCLL and UBA of $38.39 compared to the aggregate $34.44 that was previously derived from the Commission’s Initial Pricing Principle (IPP) benchmarking review.
We are reviewing the materials announced today and will continue to work constructively with the Commerce Commission’s process as these draft prices are finalised in the coming months.
We will do are best to answer any questions you may have about the implications of the draft FPP, please direct these through to your Chorus Account Manager.
Media Release Announcement
Commerce Commission releases draft FPP prices
The Commerce Commission has today released its draft Final Pricing Principle (FPP) determinations which propose an aggregate price of $38.39, compared to the aggregate $34.44 price that was previously derived from the Commission’s Initial Pricing Principle (IPP) benchmarking review.
The draft FPP individual product prices are:
- A draft UCLL price of $28.22; compared to $23.52 currently;
- A draft SLU price of $14.45; compared to $14.21 currently; and
- A draft UBA price of $10.17 compared to $10.92 currently.
“We will review the materials announced today and continue to work constructively within the Commerce Commission’s process as these draft prices are finalised,” said Chorus CEO Mark Ratcliffe.
“The aggregate price represents around a $6.50 decline from the regulated wholesale price of $44.98 that was in place until 1 December 2014, so consumers should not expect to see any increases in retail pricing,” he said.
On the basis that all other charges and demand remain consistent, Chorus estimates that the draft FPP pricing represents around an $80 million annualised EBITDA reduction from demerger pricing, based on connection numbers at 30 September 2014. This compares to the aggregate annualised EBITDA reduction of around $170 million Chorus identified from the Commission’s earlier UCLL, UCLFS and UBA IPP decisions.
The Commission has not provided any guidance on backdating or on transaction charges at this stage.
The Commission has also announced that it is consulting on whether to open a review of the UBA service and the scope of any such review.
The FPP process is currently scheduled for completion in April 2015.