6 Dec 2013

Chorus shares continue downward spiral

7:29 am on 6 December 2013

Chorus shares continued their downward spiral on Thursday after the Government's promise of at least some assistance to the embattled telephone lines company failed to improve the case to invest in its shares.

Chorus shares hit a fresh record low at $1.36 before closing at $1.38, down 5.5 cents.

Tyndall Investment Management head of equities Rickey Ward says international investors chose to invest in Chorus because they expected steady dividends, something they're now unlikely to receive.

He says a number of issues are still unresolved including what the company will have to do.

Mr Ward says many people believe Chorus has to address its own issues as well by reducing its dividend, and potentially raising capital - which the Government may help with by front-ending some of the payments.

He says Chorus was attractive for international investors because it had a high yield which was expected to be stable, and that has changed.

Communications Minister Amy Adams said on Thursday that the Government won't be putting in any more money to help Chorus build its part of the ultra-fast broadband network.

However, the Government said there will be some assistance for the embattled phone lines company.

Ms Adams said a verbal briefing from Ernst and Young Australia on Chorus' financial position made it clear the company is at risk of not meeting its contractual commitments with Crown Fibre Holdings to build the ultra-fast broadband network unless it gets some assistance from the Government.

She said the Government supports Chorus and Crown Fibre Holdings discussing changes to the specific provisions of the contract but that the $1.35 billion budget for the UFB rollout won't be increased.

Ms Adams said the Government expects Chorus to meet a significant part of the shortfall.

Chorus has said it will work with Crown Fibre Holdings to find a solution as quickly as possible.