Minding the UFB gap

Communications and IT Minister Amy Adams released the full EY report on Chorus on Saturday, showing Chorus and the Crown Fibre Holdings will somehow have to find NZ$200 million to NZ$250 million to keep the UFB rollout on track.

That's after Chorus finds up to NZ$450 million in savings, cuts dividends by NZ$290 million and increases debt by NZ$130 million. Adams repeated that Chorus and Crown Fibre Holdings would not look at renegotiating the UFB deal within the existing 'fiscal envelope' of NZ$1.35 billion.

Labour Leader David Cunliffe said EY should look at the effects of further dividend cuts, a capital raising and increased debt to close the gap. He also said Adams should investigate the impact of the timing difference between the interim and final pricing policy decisions across both bitstream and access prices.

The Coalition for Fair Internet Pricing said the report showed the Government did not need to bail out Chorus and called on Chorus to look at a NZ$500 million in fresh equity.

Telecom said it was concerned the NZ$450 million of cost savings suggested by Chorus and analysed by EY would degrade the quality of the copper network that Telecom and other retail service providers use. This could include could reducing copper broadband speed, higher network fault rates as Chorus moved to a reactive rather than proactive approach to network maintenance, longer lead times to repair faults and and an increase in the number of businesses and consumers who could get a connection, with Chorus only agreeing to new connections on a 'full cost recovery basis'.

Telecom again offered to lead fresh industry discussions on an industry-led consensus.