The Australian arm of accountancy firm Ernst & Young estimates Chorus could reduce most of its expected funding shortfall by 2020 but will still need some kind of external assistance.
The accountancy firm's report, commissioned by the Government, backs Chorus's own assessment of the impact of recent adverse regulatory pricing decisions.
Ernst & Young said last month's Commerce Commission decision will cost Chorus about $142 million a year in operating earnings and about $1 billion by 2020.
The commission ruled Chorus must halve the wholesale price of broadband access to its copper wires to $10.92 per customer from December next year.
Ernst & Young said Chorus could reduce this funding shortfall to between $200 million and $250 million through various cash-flow savings, not paying dividends for the next two years and halving dividends thereafter and increasing debt.
The accounting firm said there are various risks involved in implementing these measures which it hasn't assessed in detail, such as a downgrade of its BBB- credit rating.
Any credit rating downgrade would prevent Chorus from paying dividends without the consent of Crown Fibre Holdings, the government body overseeing the rollout of ultra-fast broadband.
Ernst & Young said further measures to meet the remaining funding shortfall could include renegotiating Chorus' contract with Crown Fibre Holdings, cutting dividends further or raising new capital.
