Chorus may not pay its forecast dividends in 2014 after the Commerce Commission affirmed it would impose price cuts on the company building the New Zealand ultra-fast broadband network.
Photo: RNZ
Chorus had forecast dividend payments of 25.5 NZ cents a share for 2014 but is now withdrawing the guidance because of the uncertainty over the cuts, which it says would curtail its ability to fund the building of the broadband.
"At this time of unprecedented levels of investment by Chorus, withdrawing dividend guidance is a regrettable but necessary step in light of the ongoing uncertainty Chorus faces," said chief executive Mark Ratcliffe in a statement on Monday.
AAP reports Chorus had until Monday to provide analysis to the government of its options to continue to meet its contractual obligations over UFB and the rural broadband initiatives in the face of price cuts ordered by the Commerce Commission.
It will be part of a Government review of options and an assessment of Chorus's financial position.
Shares of Chorus reached a record low of $1.85 earlier this month. The company has shed about a third of its value this year.
The company said earnings could be slashed by $142 million a year because of the cut to the prices it can charge customers to access its copper lines. AAP reports both Moody's Investors Service and Standard & Poor's have its credit ratings on review for a possible cut.
Chorus hopes that the Government's review will result in a reduction in the regulator's price cuts.
"We remain hopeful that as the major partner in New Zealand's largest public-private partnership we can work with the government to find a timely solution to the current issues," Mr Ratcliffe said.
