Chorus growth stalled by regulated prices

Chorus reports net profit after tax of $91m

Chorus' results for FY16 hewed very close to those it reported in FY15, saying its result in the most recent financial year was impacted by lower pricing for key services set by the Commerce Commission. Net profit after tax as $91 million (FY15: $91m), EBITDA $594m (FY15: $602m), Operating revenue $1,008m (FY15: $1,006m).

Chorus said that, while the Commerce Commission’s review of regulated pricing for its key copper services completed in December 2015, had provided a better pricing path to 2020 than the initial benchmarked pricing, its financial result for FY16 had been impacted by five and a half months of the lower pricing.

CEO Mark Ratcliffe said: “While the final copper pricing outcome was an improvement on the benchmarked pricing, it has not restored our financial position to demerger levels, and the regulatory framework that may apply from 2020 remains far from clear. We are therefore continuing to take a measured approach to ongoing investment.”

He welcomed the Government’s current review of the regulatory framework for communications services saying was “an opportunity to align and deliver on the interests of customers and investors.”

“A regulatory framework that recognises broadband as an essential utility is necessary if New Zealand is to encourage ongoing improvement and extension of its broadband capability,” Ratcliffe said. “A stable transition in pricing at 2020 is central to this and could help New Zealand achieve better broadband coverage well beyond the Government’s current goals.”

However, he added: "The combination of greater regulatory clarity and operating momentum has allowed Chorus to return to managing its business for long term shareholder value, EBITDA of $594 million is in the top half of guidance, reflecting continued good cost management across the business, and dividends were resumed in February 2016.”

Chorus said it had worked closely with its service company partners during the year to almost double the number of fibre field crews from 275 to 524, lifting the number of connections completed in a month from about 6,000 in July 2015 to 12,000 in June 2016. “In all, Chorus processed more than 110,000 connections during the year and is currently looking to recruit another 250 technicians and support staff by the end of 2016,” the company said.

Chorus CEO Mark Ratcliffe to step down in mid 2017

Chorus CEO and managing director, Mark Ratcliffe, has announced that he will step in mid 2017. Chorus chairman Patrick Strange thanked Ratcliffe for providing a long notice period, but no reason was given for his planned departure.

Ratcliffe said: “Aside from allowing the board to start a recruitment search, it is business as usual for me and for the Chorus team. I am very happy to keep leading a great team of talented people and my hand remains very firmly on the steering wheel.”

Ratcliffe has been CEO of Chorus since its genesis as an operationally separate business unit within Telecom. He led the transition of Chorus through the demerger and was also Telecom’s executive lead for the Ultra-Fast Broadband initiative.

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