Ann: GENERAL: SPK: Spark changes pricing

• Release Date: 10/12/14 08:43
• Summary: GENERAL: SPK: Spark changes pricing
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					SPK
10/12/2014 08:43
GENERAL
PRICE SENSITIVE
REL: 0843 HRS Spark New Zealand Limited

GENERAL: SPK: Spark changes pricing

Market Announcement

10 December 2014

Spark changes pricing to reflect Chorus wholesale copper line costs

Spark said today it will change the price of selected homephone and broadband
plans from 1 February 2015, following last week's Commerce Commission draft
decision on the amount that Chorus can charge Spark and other Retail Service
Providers (RSPs) for access to the Chorus copper wholesale network.

Last week's draft decision signalled:
- A $5.40 increase (incl.GST) in the wholesale charges for homephone lines
that have been in place for the past two years; and
- A $4.54 increase (incl. GST) in the broadband lines charges that took
effect on 1 December, 2014

Chorus has argued that an increase in charges to Spark and other RSPs must be
backdated, and the Commerce Commission has yet to give a view on this matter.

Spark price changes from 1 February, 2015

The price of Spark's homephone-only plans and the 40GB and 80GB broadband
plans (ADSL and VDSL, excluding Ultra Fibre plans) will go up by between
$2.50 and $4.25 a month from 1 February 2015.  A summary of key price changes
is in the table below. There will be similar increases in the price of
business copper broadband plans, with full details available at
spark.co.nz/pricechanges

While these increases will affect lower-end plans, Spark will continue
delivering more value to its customers by lowering the price of Unlimited
Broadband Data and homephone packages  - also from 1 February.

These price changes affect Spark Home, Mobile and Business services.  Spark
Digital will be contacting its medium-to-large business and government
customers to discuss any increases for Spark Digital services.

Spark Home, Mobile and Business Chief Executive Chris Quin said: "Over the
past two years we have been competing hard in the broadband market on the
basis that there would be a $10 reduction in the monthly charge we pay Chorus
for providing copper broadband access.

"Market competition has brought great value for customers and the expected
wholesale cost reduction for Spark and other ISPs has been built into current
broadband prices. For example, Spark's basic $75 broadband package today
would have cost customers $105 two years ago.

"Now it's indicated that wholesale broadband access charges will go down by
almost $5, rather than $10, and homephone access changes will go up by more
than $5.  We understand this is how the process works, but we do have to
react accordingly.

Mr Quin said the monthly price increases of between $2.50 and $4.25 meant
that Spark would only partially recover increases in wholesale charges.

He acknowledged that the Commission's decision on the new charges was a draft
and was unlikely to be finalised until sometime next year.  However, he noted
that Chorus was arguing for the new wholesale charges to be backdated.

"Given this negative uncertainty, Spark has no choice but to change its
prices now," Mr Quin said.

"If the Commerce Commission confirms these charges and decides to backdate
its final decision, then the price increases we're announcing today will not
fully cover our increased wholesale costs.  Once we have a clearer view on
the final decision on wholesale charges and whether these charges will be
backdated, we will review the situation - and we will do the right thing by
our customers."

Unlimited Broadband Data price reduction, traffic management clause removed

Mr Quin said Spark was also taking this opportunity to simplify and
streamline its broadband plans - and to continue delivering more value to its
customers.  From 1 February, Spark will drop the price of its Unlimited
Broadband Data and homephone packages by $10, (footnote 1) and remove the
sale of the 150GB and 500GB data plans to new customers (since these would be
priced on par with or above the Unlimited plan).

"The Unlimited data plans have been a great success and we want to make them
even more attractive to customers. As we haven't yet used traffic management
on this plan, and will not be doing so in the near future, we have also
decided to remove the traffic management policy from the Unlimited Broadband
Data plans," Mr Quin said.

ENDS

SUMMARY OF KEY PRICE CHANGES
Full details, including increases to business plan pricing, Naked plan
pricing, and VDSL pricing are at spark.co.nz/pricechanges

Spark plan
Home phone only
(Akld, Wgtn, Chch)
Current monthly price (incl. GST)
$46
Cost difference between IPP and FPP Chorus charges (incl.GST)  (footnote 3)
+$5.40
Price change (incl. GST)
+$4
Price from 1 Feb 2015
(incl. GST)
$50

Spark plan
Home phone only
(Rest of NZ)
Current monthly price (incl. GST)
$51
Cost difference between IPP and FPP Chorus charges (incl.GST)  (footnote 3)
+$5.40
Price change (incl. GST)
+$2.50
Price from 1 Feb 2015
(incl. GST)
$53.50

Spark plan
ADSL Broadband and homephone, entry level 40GB plan
Current monthly price (incl. GST)
$75
Cost difference between IPP and FPP Chorus charges (incl.GST)  (footnote 3)
+$4.54
Price change (incl. GST)
+$4
Price from 1 Feb 2015
(incl. GST)
$79

Spark plan
ADSL Broadband and homephone, 80GB plan (footnote 2)
Current monthly price (incl. GST)
$85
Cost difference between IPP and FPP Chorus charges (incl.GST)  (footnote 3)
+$4.54
Price change (incl. GST)
+$4
Price from 1 Feb 2015
(incl. GST)
$89

Spark plan
ADSL Broadband and homephone, Unlimited Data plan
Current monthly price (incl. GST)
$109
Cost difference between IPP and FPP Chorus charges (incl.GST)  (footnote 3)
+$4.54
Price change (incl. GST)
-$10
Price from 1 Feb 2015
(incl. GST)
$99

Notes
1. The $10 price reduction will apply to all Unlimited Broadband Data plans,
except the Naked ADSL Unlimited Plan, which will remain the same in price.
2. For customers in Auckland, Wellington and Christchurch only.  The Ultra
Broadband 80GB plan will cost $99 for the rest of New Zealand from 1 February
2015.
3. IPP (Initial Pricing Principle) charges for wholesale line charges (which
affect standalone voice services and broadband services) came into effect in
December 2012. IPP charges for wholesale broadband services were finalised
by the Commerce Commission in 2013 and came into effect on 1 December 2014.
Draft FPP (Final Pricing Principle) charges were announced by the Commission
on 2 December, 2014.

For media queries, please contact:
Richard Llewellyn
Head of Corporate Communications +64 (0) 27 523 2362

For investor relations queries, please contact:
Mark Laing
General Manager Corporate Finance +64 (0) 27 227 5890
End CA:00258720 For:SPK    Type:GENERAL    Time:2014-12-10 08:43:51