Ann: ADDRESS: CNU: Chorus updates connection numbers, gives...

• Release Date: 07/10/14 08:33
• Summary: ADDRESS: CNU: Chorus updates connection numbers, gives regulatory update
• Price Sensitive: No
• Download Document  4.47KB

					CNU
07/10/2014 08:33
ADDRESS

REL: 0833 HRS Chorus Limited (NS)

ADDRESS: CNU: Chorus updates connection numbers, gives regulatory update

7 October 2014

STOCK EXCHANGE ANNOUNCEMENT

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 premises at 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 demerger levels 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

For further information:

Ian Bonnar
Corporate Affairs Manager
Mobile: +64 (27) 215 7564
Email: [email protected]

Brett Jackson
Investor Relations Manager
Mobile: +64 (27) 488 7808
Email: [email protected]
End CA:00256148 For:CNU    Type:ADDRESS    Time:2014-10-07 08:33:05