Chorus chief executive Mark Ratcliffe says suspending dividend payments for a couple of years wouldn't be enough to allow the company to manage its way through its current regulatory fix.
Photo: RNZ
The Commerce Commission has ruled the price Chorus can charge for broadband over copper wires must almost halve from December next year.
The decision prompted Chorus to withdraw its guidance on its dividend and on Monday announced it was appealing against the decision to the High Court.
Chorus also asked the commission for a final pricing principal review of its initial decision on prices Chorus can charge for its copper broadband service.
"We just think that on the point of law that the Commerce Commission decision leaves a lot to be desired and we don't have an ability to go for a merits-based review under this regime, so we're using the only avenue that's available to us, which is to file for a High Court appeal," Mr Ratcliffe said.
"We will let this play out within the court, so I don't really want to prejudice our position by talking too much about it now, but we just don't think that the process was done in the right way."
The commission's ruling in October this year cut the price Chorus can charge for copper wire broadband and phone services by about $10 a month to $34.44 in December 2014.
Chorus said that price could cause it to default on its bank loan, jeopardise its $929 million contract to roll out the ultra-fast broadband infrastructure and cost it $1 billion by 2020.
The company hoped the court process would be concluded as quickly as possible, with Mr Ratcliffe saying it was in no one's interests for it to drag. However, he acknowledged the actual cost review Chorus had requested would take significantly longer.
Suspending the dividend for two years would be insufficient to offset the impact of the commission's decision, if there were no other changes to the current situation, he said.
"I don't think you can just talk about one element of the business in that way and say 'we'll just do this one thing and then all will be good'."
Dividend amount
The dividend was costing the company about $75 million per year and the Commerce Commission ruling on unbundled bitstream would cost $142 million.
On 7 November this year, the Government announced an independent assessment of Chorus' financial position and capability to deliver on the contract.
The review is being done by Ernst & Young Australia and the Government said it wants a robust understanding of whether the ultra-fast broadband programme is at risk.
Chorus shares continued to slide on Monday and were down 8.5 cents to $1.44 a share at the close of trade on Monday.
On Friday, they fell as low as $1.47 before recovering a little to close at $1.52.5. At the end of October they were $2.65.
