28 Aug 2012

Revised price controls could hamper Chorus broadband plans

7:04 am on 28 August 2012

Shares in Chorus jumped 7% on Monday after flagging high dividend payouts, but the company warned that revised price controls could hamper its ultra fast broadband plans.

The stock rose 21 cents to $3.37 a share after a maiden profit of $102 million was posted for in the seven months to June, helped by steady grow in broadband connections, particularly among business.

The telecommunications network declared a pro-rated dividend payout of 14.6 cents and 25.5 cents per share in the coming year, though the company would not finalise this because of regulatory uncertainty.

Chief executive Mark Ratcliffe said investment in the fibre network could be adversely affected by the Commerce Commission's plans to cut the amount Chorus can charge for use of its copper network.

Mr Ratcliffe says investment in fibre could be adversely affected by Commerce Commission's plans to reconsider the amount Chorus can charge for using its copper network.

"Our key concern remains that this is a period of complex industry transition.

"The commissioner's decisions on unbundled copper and broadband pricing will shape industry investment in the critical coming years.

"If that investment is tilted back to copper rather than fibre, it will not help us fast-forward into a fibre world," says Mr Ratcliffe.

"This is a time when industry and public policy should clearly be on the same road".

Mark Ratcliffe said the copper network will supply the bulk of earnings for many years to come, with the main phone retailers yet to reveal their ultra fast broadband plans.

A couple of hundred customers have signed up to buy fibre so far, and uptake is expected to be modest in the early years

Chorus is launching an adverstising campaign to boost awareness of ultra fast broadband.

Chorus was separated from Telecom's retail arm at the end of last year.