The Labour Party is accusing the Government of preparing to give corporate welfare to Chorus following a decision by the Commerce Commission decision that it must lower the price for access to its copper network.
The decision cuts the price Chorus can charge for its copper wire broadband and phone services by about $10 a month to $34.44 in December next year.
Chorus says the new price could cause it to default on its bank loan, jeopardise its contract to roll out ultra fast broadband and cost it $1 billion by 2020.
Labour's Clare Curran says the copper price drop was well signalled when Chorus split from Telecom in 2011.
She asked the Prime Minister during question time in Parliament on Wednesday if the Government had assured Chorus that its profitability would not be affected.
John Key said his advice was that no such assurance was made. He said there was no bailout and the Government would outline its options on Thursday.
These include the possibility of legislating over the top of the Commerce Commission or taking an equity stake in Chorus.