Broadband infrastructure company, Chorus, has elected to withdraw its 2014 financial year dividend guidance of $0.255 per share.
According to chief executive officer (CEO), Mark Ratcliffe, the decision was “regrettable but necessary” and made in response to the ongoing uncertainty faced by Chorus.
In August, the Chorus board noted it intended to reassess its optimal capital management settings when the outcomes from the Government’s regulatory framework review were known.
On November 5, when the Commerce Commission announced it would reduce UBA prices by 49 per cent to $10.92 from $21.46, effective December 1, 2014, Chorus stated absent intervention by the Government would force a fundamental review of a range of key matters .
In response to the announcement, Ratcliffe said, “The ability to finance the business cases of both Chorus and other LFCs, which were agreed when the UFB contracts were awarded, is missing from today’s decision.”
The Minister for Communications and Information Technology then announced an independent review of the impact of the Commerce Commission’s decision on Chorus’ financial position and capability to deliver on its contractual commitments under the UFB and Rural Broadband Initiatives.
The Minister also requested that Chorus advise by November 18 what steps it intended to take in relation to capital management options, and as such, Chorus has made its withdrawal.
Chorus is investing around three dollars in the ultra-fast broadband (UFB) for every dollar of financing provided by the Crown to support the delivery of the upgraded infrastructure.
“We remain hopeful that as the major partner in the NZ’s largest public private partnership we can work with the Government to find a timely solution to the current issues that works for all parties and provides Chorus and its investors with the certainty we need to get on with delivering this… infrastructure upgrade,” Ratcliffe said.