Media Release: Chorus updates connection numbers and gives regulatory update
Chorus will today give institutional investors and analysts a presentation on its business.
Media Release: Chorus updates connection numbers and gives regulatory update
Chorus will today give institutional investors and analysts a presentation on its business, which includes:
- An update on total fixed line connections and market trends
- An update on the May investor presentation on the pending final pricing principle (FPP) processes, Chorus’ latest views on potential economic cost modelling (TSLRIC) outcomes and other regulatory and government related matters.
As part of the regulatory update, today’s presentation further informs the market on TSLRIC modelling choices and key parameters that will be part of the Commission’s decision making. A copy of the presentation is attached.
The webcast can be viewed at www.chorus.co.nz/webcast from 10:30am
Connection Update
Fixed line connections increased by 6,000 lines over the three month period to 30 September to a total of 1,783,000 lines. Total broadband connections increased by 15,000 to 1,178,000.
Chorus’ UFB network deployment continues to be ahead of schedule with fibre passing about 286,000 premisesat 30 September, meaning 386,000 end-users are within reach of ultra-fast broadband.
Fibre connections grew to 53,000 across Chorus’ nationwide network at 30 September and about 37,000 fibre connections are within Chorus’ completed UFB network footprint.
Chorus’ rural broadband rollout also continues at pace and had brought 75,000 rural lines within reach of better broadband by 30 September.
TSLRIC modelling choices
Early in the Commission’s FPP process, a hybrid TSLRIC copper modelling approach was publicly outlined by world leading experts Analysys Mason. Chorus has said it would continue with this work. Modelling from Analysys Mason will be submitted to the Commission on 1 December 2014 in line with the Commission’s published timetable.
Analysys Mason is a global telecommunications consultancy, and has assisted regulators in undertaking similar work for networks in Australia, Norway, Denmark, France and the Netherlands.
“Many of our investors have been eager to know how this work is progressing, so to assist the market in further understanding how this particular form of economic modelling technique may be approached, we have set out three scenarios derived from Analysys Mason’s modelling work,” said Mark Ratcliffe, Chorus CEO.
“Under the first scenario, our work with Analysys Mason so far suggests that if we built a copper network that delivers the services provided by Chorus today, without re-using any existing infrastructure at all, it would cost around $16 billion.
“While that full valuation of the network provides a valid starting point for considering value, final FPP prices determined by the Commission are expected to be less given the range of matters upon which it will ultimately take a view. We also note that in the real world market, pricing would of course be constrained by market realities including the need for Chorus to compete with other access networks and technologies.
“The Commission has engaged its own cost modelling firm and it may model fibre costs instead of copper and the model will be the Commission’s own view of how to build a hypothetical new optimised network from scratch.
“The Commission will also decide various parameters that, combined with its modelling choices, will determine the final FPP prices. The Commission has not yet provided preliminary views on all parameters that it may use.”
As such, Chorus has also outlined two further scenarios where the parameters are applied in different ways.
“We have consistently said that we believe evidence does not support aggregate copper pricing below demergerlevels of around $45 a month, and that rebalancing is likely between layer 1 and layer 2 pricing, and the progression of modelling continues to support this view,” he said.
The Commerce Commission is scheduled to release draft FPP determinations on 1 December 2014.
Chorus has made, and continues to make, extensive submissions on ongoing consultation documents from the Commission which can be found on the Commission’s website.
ENDS
Who do I contact?
For more information please contact:
Ian Bonnar Corporate Affairs Manager
Mobile: +64 (27) 215 7564
Email: ian.bonnar@chorus.co.nz
Brett Jackson Investor Relations Manager
Mobile: +64 (27) 488 7808
Email: brett.jackson@chorus.co.nz