28 Oct 2015

Chorus hopes review will lift 'stranglehold'

9:25 am on 28 October 2015

Network company Chorus is cautiously optimistic it might emerge from what it sees as a regulatory stranglehold after 2020.

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Photo: RNZ

That is when a newly launched Ministry for Business Innovation and Employment (MBIE) review of telecommunication regulations is due to be completed.

But, for now, Chorus is stuck with rules that it says have cost it money, forced a cancellation of dividends and led thousands of shareholders to abandon the company and move elsewhere.

It adds the rules deter investment in new technology.

Chorus inherited the old lines business of Telecom while the rest of the company went into the new firm, Spark.

Since then, Chorus has come under the authority of the Commerce Commission, which ordered it to drastically reduce the charges it levies for the use of its copper wire.

That caused its annual profit to June to fall by 13.5 percent, and dividends to be cancelled for a second year.

Chairperson Patrick Strange was challenged on this at the company's annual general meeting yesterday by two shareholders.

In response, he said restoration of dividends would only be considered after the Commerce Commission had come out with the final rules for the company.

That ruling from the Commerce Commission is expected by December.

In its original regulatory verdict, the commission proposed allowing Chorus to charge $34 a month for its wires, but later raised that offer to $38.

Chorus said this was still way below the $45 a month that applied when Chorus was split from Telecom.

The MBIE review will look at the best way to regulate telecomunications after 2020, and Dr Strange told the meeting the language of the review suggested investors as well as consumers might be considered.

Meanwhile, Dr Strange said 8000 shareholders had quit the company in the past two years.

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